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NORTH CAROLINA 




Volume ID, Issue 15 
Pages 1428 - 1 650 

NOVEMBER 1, 1995 



This issue contains documents officially filed 
through October 18, 1995. 



Office of Administrative Hearings 

Rules Division 

424 North Blount Street (27601) 

PO Drawer 27447 

Raleigh, NC 27611-7447 

(919) 733-2678 

FAX (919) 733-3462 



Julian Mann III, Director 

James R. Scarcella Sr., Deputy Director 

Molly Masich, Director of APA Services 

Ruby Creech, Publications Coordinator 

Teresa Kilpatrick, Editorial Assistant 

Jean Shirley, Editorial Assistant 



IN THIS ISSUE 



I. IN ADDITION 

Industrial Commission 1428 

Voting Rights Act 1429-1431 

II. PROPOSED RULES 
Agriculture 

Plant Industry 1432-1435 

Environment, Health, and Natural Resources 

Coastal Resources 1552 - 1565 

Environmental Management 1515 - 1551 

Marine Fisheries 1551 - 1552 

Wildlife Resources 1565 . 

Human Resources 

Medical Assistance 1479-1483 

Mental Health, Developmental Disabilities and 

Substance Abuse Services 1435 - 1479 

Social Services 1483-1489 

Insurance 

Actuarial Services 1514 

Consumer Services 1489 - 1490 

Financial Evaluation Division 1503 - 1513 

Investigations Division 1490 - 1492 

Property and Casualty 1492- 1502 

Special Services Division 1513-1514 

Licensing Boards 

Electrical Contractors 1579-1583 

Landscape Architects 1583 - 1584 

Public Education 
Elementary & Secondary 1565 - 1567 

Secretary of State 

Corporations Division 1567-1573 

Notary Public Division 1578-1579 

Securities Division 1575 - 1578 

Uniform Commercial Code 1573 - 1575 

m. LIST OF RULES CODIFIED 1585-1588 

IV. RRC OBJECTIONS 1589-1594 

V. CONTESTED CASE DECISIONS 

Index to ALJ Decisions 1595-1609 

Text of Selected Decisions 

94 OSP 0684 1610- 1623 

95 CPS 0459 1624- 1627 

95 CPS 0540 1628- 1631 

95 EDC 0027 1632- 1633 

VI. CUMULATIVE INDEX 1635-1650 



NORTH CAROLINA REGISTER 

Publication Schedule 

(July 1995 - November 1995) 



Volume 
and 
Issue 

Number 


Issue 
Date 


Last Day 
for Filing 


Last Day 
for Elec- 
tronic 
Filing 


Earliest 
Date for 
Public 
Hearing 
15 days 
from no- 
tice 


• End of 

Required 

Comment 

Period 

30 days 

from 

notice 


I flst Day 

to Submit 

toRRC 


** FjirUest 

Effective 

Date 


10:7 


07/03/95 


06/12/95 


06/19/95 


07/18/95 


08/02/95 


08/21/95 


10/01/95 


10:8 


07/14/95 


06/22/95 


06/29/95 


07/31/95 


08/14/95 


08/21/95 


10/01/95 


10:9 


08/01/95 


07/11/95 


07/18/95 


08/16/95 


08/31/95 


09/20/95 


11/01/95 


10:10 


08/15/95 


07/25/95 


08/01/95 


08/30/95 


09/14/95 


09/20/95 


11/01/95 


10:11 


09/01/95 


08/11/95 


08/18/95 


09/18/95 


10/02/95 


10/20/95 


12/01/95 


10:12 


09/15/95 


08/24/95 


08/31/95 


10/02/95 


10/16/95 


10/20/95 


12/01/95 


10:13 


10/02/95 


09/11/95 


09/18/95 


10/17/95 


11/01/95 


11/20/95 


01/01/96 


10:14 


10/16/95 


09/25/95 


10/02/95 


10/31/95 


11/15/95 


11/20/95 


01/01/96 


10:15 


11/01/95 


10/11/95 


10/18/95 


11/16/95 


12/01/95 


12/20/95 


02/01/96 


10:16 


11/15/95 


10/24/95 


10/31/95 


11/30/95 


12/15/95 


12/20/95 


02/01/96 



This table is published as a public service, and the computation of time periods are not to be deemed binding or controlling. 
Time is computed according to 26 NCAC 2B .0103 and the Rules of Civil Procedure, Rule 6. 

* An agency must accept comments for at least 30 days after the proposed text is published or until the date of any public 

hearing, whichever is longer. See G.S. 150B-21.2(f) for adoption procedures. 

** The "Earliest Effective Date" is computed assuming that the agency follows the publication schedule below, that the Rules 
Review Commission approves the rule at the next calendar month meeting after submission, and that RRC delivers the rule to the 
Codifier of Rules five (5) business days before the 1st day of the next calendar month. 



Revised 07/95 



IN ADDITION 



This Section contains public notices that are required to be published in the Register or have been approved by the 
Codifier of Rules for publication. 



PUBLIC NOTICE OF RULE-MAKING 
NORTH CAROLINA INDUSTRIAL COMMISSION 



NOnCE IS HEREBY GIVEN that, pursuant to the rule-making authority vested in it by N.C.G.S. § 97-26 and 
§ 143-300, the North Carolina Industrial Commission will consider adopting (1) a Revised Medical Fee Schedule, (2) 
Revised Rules for Rehabilitation Services, (3) Utilization Review Rules, and (4) Managed Care Rules, all under the 
Workers' Compensation Act, to become effective November 30, 1995. The Commission solicits the comments of all 
interested persons, firms, and organizations. Copies of all four of the above may be obtained by any interested person by 
addressing a request to the address below. 

Hie Commission requests written comments on all four of the above. In addition, there will be a public hearing 
held on the 16th day and 17th days of November, at 10:00 a.m., in Room 2149, the Utilities Commission Hearing Room, 
Dobbs Building, 430 North Salisbury Street, Raleigh, N.C., during which the Commission will hear the verbal comments 
of persons scheduled to speak. Those desiring to make an oral presentation, not to exceed 15 minutes in length, should 
submit a request on or before November 14, 1995. Speakers at the public hearing are encouraged to prepare a written 
summary of remarks for the use of the Commission. 

WRITTEN COMMENTS, REQUESTS FOR COPIES OF ANY OR Ali OF THE FOUR AND REQUESTS FOR 
ORAL PRESENTATIONS SHOULD BE ADDRESSED TO COMMISSIONER THOMAS J. BOLCH AT 430 NORTH 
SAUSBURY STREET, RALEIGH, NC 27611. WRITTEN COMMENTS WILL BE RECEIVED BY THE COMMISSION 
UP TO AND INCLUDING NOVEMBER 30, 1995. 

This 17th day of October, 1995. 



J. Howard Bunn, Jr., Chairman 
North Carolina Industrial Commission 



10:15 NORTH CAROLINA REGISTER November 1, 1995 1428 



IN ADDITION 



City of Greenville 
North Carolina 
City Attorney's Office 
P.O. Box 7207 
Greenville, NC 27835-7207 

Ms. Elizabeth Johnson 

Acting Chief 

Voting Section, Civil Rights Division 

U.S. Department of Justice 

P.O. Box 66128 

Washington, D.C. 20035-6128 

September 28, 1995 
RE: Preclearance of Annexation/City of Greenville. N.C. 

Dear Ms. Johnson: 

In your letter of August 22, 1995, you advised us that the nine annexations submitted to your office by our office on June 
23, 1995 had been precleared pursuant to Section 5 of the Voting Rights Act of 1965. As described in your letter, the 
ordinance numbers were "94-19, 25, 26, 36, 38, 41, and 45-47," suggesting that all of the ordinances had a prefix number 
of "94." In fact, only Ordinance #94-19 had that prefix; the remainder of the ordinances submitted for preclearance had 
a prefix of "95." This apparent oversight has resulted in some confusion in our City Clerk's office and in the office of the 
local Board of Elections. 

Accordingly, please confirm that the ordinance numbers for the annexations that received preclearance, as advised in your 

letter of August 22, 1995, are as follows: 

Ordinance No. 94-19 (Lot 4, Block A, Park Place and a portion of Hemby Lane) 

Ordinance No. 95-25 (Thomas F. Taft property) 

Ordinance No. 95-26 (South Square, Phase 3, Lots 1-2) 

Ordinance No. 95-36 (Windsor Subdivision, Section 10, Lot 430) 

Ordinance No. 95-38 (Portion of Thomas F. Taft property) 

Ordinance No. 95-41 (Covengton Downe Subdivision, Lot 24, Block A) 

Ordinance No. 95-45 (G. Randy Bailey property) 

Ordinance No. 95-46 (Willow Run) 

Ordinance No. 95-47 (Windsor Subdivision, Section 9) 

If you need any further information or have any questions, please do not hesitate to call me. 

With best wishes, 1 am 

Sincerely yours, 

Robert W. Oast, Jr. 
City Attorney 



1429 NORTH CAROLINA REGISTER November 1, 1995 10:15 



IN ADDITION 



City of Greenville 
North Carolina 
City Attorney's Office 
P.O. Box 7207 
GreenvUle, NC 27835-7207 

Ms. Elizabeth Johnson 

Acting Chief 

Voting Section, Civil Rights Division 

U.S. Department of Justice 

P.O. Box 66128 

Washington, D.C. 20035-6128 

September 29, 1995 
RE: Preclearance of Annexation/City of Greenville. N.C. 

Dear Ms. Johnson: 

This is a follow-up to my letter to you of yesterday, September 28, 1995, wherein I requested clarification regarding 
ordinance numbers for 9 annexations with respect to which you had advised us of preclearance under Section 5 of the Voting 
Rights Act in a letter dated August 22, 1995. In yesterday's letter, I advised you that only Ordinance #94-19 had the "94" 
prefix, and that the remaining 8 ordinances should have had a prefix of "95. " That information is still correct with respect 
to all of the ordinances except 94-19. 

In my letter to you of June 21, 1995 (copy enclosed), I listed Ordinance #94-19 as one of those with respect to which the 
City was requesting preclearance. A review of the ordinances actually submitted for preclearance indicates that Ordinance 
#94-19 should be Ordinance #95-19. A certified copy of that ordinance is enclosed for your use. All of the other ordinance 
numbers in that submission are correct, but clarification of your August 22, 1995 letter with respect to those ordinance 
numbers is stUl necessary. 

I apologize if I have added confusion to this already confusing matter. If you have any questions or need any further 
information, please give me a call. 



With best wishes, I am 

Sincerely yours. 



Robert W. Oast, Jr. 
City Attorney 



10:15 NORTH CAROLINA REGISTER November 1, 1995 1430 



IN ADDITION 



U.S. Department of Justice 

Civil Rights Division 

DLP;GS:VNN:tlb Voting Section 

DJ 166-012-3 P.O. Box 66128 

95-1826 Washington, D.C. 20035-6128 



October 10, 1995 

Robert W. Oast, Jr. Esq. 

City Attorney 

P.O. Box 7207 

Greenville, North Carolina 27835-7207 

Dear Mr. Oast: 

This refers to your September 28 and 29, 1995, letters concerning the submission under Section 5 of the Voting 
Rights Act, 42 U.S.C. 1973c, of nine annexations (ordinance Nos. 95-19, 25, 26, 36, 38, 41, and 45 to 47) and their 
designation to districts of the City of Greenville in Pitt County, North Carolina. 

We have reviewed our records and it appears that our August 22, 1995, letter contained a typographical error in 
that it stated the incorrect year. Please be advised that our records show that on August 22, 1995, Section 5 preclearance 
was granted to the above-referenced changes. We apologize for any inconvenience we may have caused you in this matter. 



Sincerely, 



Deval L. Patrick 

Assistant Attorney General 

Civil Rights Division 



By: 



Elizabeth Johnson 
Acting Chief, Voting Section 



1431 NORTH CAROLINA REGISTER November 1, 1995 10:15 



PROPOSED RULES 



TITLE 2 - DEPARTMENT OF AGRICULTURE 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the North Carolina Board of Agricul- 
ture intends to amend rules cited as 2 NCAC 48A .1702; 
52B .0207, .0212, .0302; 52C .0105 and adopt 2 NCAC 
48C .0029. 

Proposed Effective Date: February 1, 1996. 

A Public Hearing will be conducted at 10:00 a.m. on 
December 7, 1995 at Gov. James B. Hunt, Jr. Horse 
Complex (Restaurant), 4601 Trinity Rd. , Raleigh, NC 
27607. 

Reason for Proposed Action: 

2 NCAC 48A .1702 - To add the MUe-a-Minute plant to the 
official list of noxious weeds, in order to provide for the 
regulation and control. 

2 NCAC 48C .0029 - To require the variety to be stated on 
the label for certain kinds of seed, in order to protect buyers 
of seed. 

2 NCAC 52B .0207 - To establish requirements for importa- 
tion of "sporting swine" into North Carolina, in order to 
prevent the introduction and spread of swine diseases and to 
modify pseudorabies program requirements for importation 
of all breeding swine. 

2 NCAC 528 .0212 - To add the Brushtail Possum to the 
list of animals for which a permit is requested prior to 
importation, in order to prevent the introduction and spread 
of animal diseases. 

2 NCAC 52 B .0302 - To require "sporting swine" offered 
for sale within the state to originate from a validated 
brucellosis-free herd, in order to prevent the spread of 
brucellosis in swine. 

2 NCAC 52C .0105 - To require "sporting swine" offered 
for sale within the state to originate from a qualified 
pseudorabies-negative herd, in order to prevent the spread 
of pseudorabies among swine and to modify pseudorabies 
program requirements for movement of all feeding and 
breeding swine within the state. 

Comment Procedures: Interested persons may present their 
statements either orally or in writing at the public hearing 
or in writing prior to the hearing by mail addressed to 
David S. McLeod, Secretary of the North Carolina Board of 
Agriculture, P.O. Box 27647, Raleigh, NC 27611. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government funds. 

CHAPTER 48 - PLANT INDUSTRY 

SUBCHAPTER 48A - PLANT PROTECTION 

SECTION .1700 - STATE NOXIOUS WEEDS 



.1702 NOXIOUS WEEDS 

(a) Class A Noxious Weeds. The North Carolina Board 
of Agriculture hereby establishes the following list of Class 
A Noxious Weeds: 

(1) All weeds listed in 7 C.F.R. 360.200 which is 
hereby incorporated by reference including 
subsequent amendments and editions. Copies of 
the Code of Federal Regulations may be ob- 
tained from the Superintendent of Documents, 
Government Printing Office, Washington, DC 
20402, at a cost of twelve dollars ($12.00); 

(2) Elodea, African ~ Lagarosiphon spp. (all spe- 
cies); 

(3) Fern, Water ~ Salvinia spp. (all except S. 
rotundifolia); 

(4) Mile-a-Minute ;; Polygonum perfoliatum: 
(^ £5} Stonecrop, Swamp — Crassula helmsii; 

(5) £6} Water-chestnut — Trapa spp. 

(b) Class B Noxious Weeds. The North Carolina Board 
of Agriculture hereby establishes the following list of Class 
B Noxious Weeds: 

(1) Betony, Florida—Stachys floridana Shuttlew.; 

(2) Fieldcress, Yellow— Rorippa sylvestris (L.) 
Bess.; 

(3) Lythrum — Any Lythrum species not native to 
North Carolina; 

(4) Puncturevine— Tribulus terrestris L.; 

(5) Thistle, Canada—Cirsium arvense (L.) Scop.; 

(6) Thistle, Musk—Carduus nutans L.; 

(7) Thistle, Plumeless— Carduus acanthoides L.; 

(8) Watermilfoil, Eurasian — Myriophyllum 
spicatum L. ; 

(9) Waterprimrose, Uruguay — Ludwigia 
uruguayensis (Camb.) Kara. 

(c) Class C Noxious Weeds. The North Carolina Board 
of Agriculture hereby establishes the following list of Class 
C Noxious Weeds: none. 

Statutory Authority G.S. 106-420. 

SUBCHAPTER 48C - SEEDS 

.0029 VARIETY LABELING 

The variety name shall be stated on the seed analysis label 
for the following kinds of seed: 

(1) cotton; 

(2) field com; 

(3) peanuts: 

(4) soybeans; 

(5) tobacco; and 

(6) wheat. 

Statutory Authority G.S. 106-277.15. 

CHAPTER 52 - VETERINARY DIVISION 
SUBCHAPTER 52B - ANIMAL DISEASE 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1432 



PROPOSED RULES 



SECTION .0200 - ADNUSSION OF 
LIVESTOCK TO NORTH CAROLINA 

.0207 IMPORTATION REQUIREMENTS: 
SWINE 

(a) All swine imported into the state, except by special 
permit or for immediate slaughter, shall be accompanied by 
an official health certificate issued by a state, federal, or 
accredited veterinarian stating that they are free from any 
signs of an infectious or communicable disease and are not 
known to have been exposed to same. The health certificate 
shall contain the ear tag number of each animal or other 
identification acceptable to the State Veterinarian. Swine 
imported for feeding or breeding purposes shall be moved 
in clean and disinfected trucks or other conveyances. 

(b) Breeding swine shall originate from a "Validated 
Brucellosis-Free" herd or a "Validated Brucellosis-Free" 
State and originate from a "Qualified Pseudora- 
bies-Negative" h*fd herd, Qualified-Negative Gene- Altered 
Vaccinated Herd (QNV) or Pseudorabies Stage IV or V 
(Free) State as defined in Title 9, Parts 78.1 and 85 of the 
Codo of Fadoral Rogulaliono. Parts 7 8 . 1 and 8 5 of Titl e 9 
of th e Code of Fodoral R e gulationo ar e h e r e by adoptod by 
rcfcronce, including subsequ e nt amendments. — Copios of the 
Codo of Fodoral Regulations may bo obtained from tho 
Gov o mment Printing Offioo, Waohington, B.C., at a ooot 
determin e d by that offic e. 

(c) All feeder swine imported into the state shall be 
accompanied by an official health certificate issued by a 
state, federal or accredited veterinarian stating that: 

(1) No pseudorabies vaccine has been used in the 
herd of origin, unless the herd is a pseudorabies 
Controlled Vaccinated herd as defined in Title 9, 
Part 8 5. 1 of tho Code of F e d e ral R e gulations, or 
a poeudorabi e o monitored vaccinated herd; and 

(2) The swine were tested and found negative for 
pseudorabies within 30 days prior to importa- 
tion; or 

(3) The swine originated from a pseudorabies-free 
area as determined by the State Veterinarian; or 

(4) The swine originated firom a Qualified Pseudora- 
bies Negative Herd as d e fin e d in Titl e 9, Part 8 5 
of th e Cod e of Federal Regulationo ; or 

(5) The swine originated from a monitored feeder 
pig herd. For the purp>oses of this Rule, in 
ord e r to qualify' aa a monitored feeder pig h e rd, 
t e sting must have boon p e rformed in aooordanoe - 
with the following standards: 

(A) — In herds of ton or fewer brooding swine, all 
brooding owin e must t e st n e gativ e within 12 
months prior to importation. 

fB) — In herds of 1 1 — to 35 breeding swine, — tea 
randomly selected breeding animals, (to in 
elud e giltii. sows and boars) must t e et n e gativ e 
within 12 months prior to importation. 

(C^ — In herds of more than 35 breeding swine, 
either 30 or 30 percent of tho total herd. 



whiobovor is looa, randomly soloctod brooding 
ffi lto, BOWS and boaro muot toot negative within 
12 months prior to importation. 

(©) — All brooding gilto, sows and booro in a herd 
shall bo subject to random selection for testing. 

(E) — T e sting must b e done by us e of an official 
po e udorabioo toot, as d e fin e d in Titl e 9, Port 
8 5 of the Codo of Fodoral Regulations. 

(d) Healthy swine for feeding purposes may move directly 
from a farm of origin in a contiguous state on which they 
have been located for not less than 30 days to a livestock 
market or stockyard in North Carolina that has been 
state-federal approved for handling feeder swine, without the 
health certificate required herein, provided such swine are 
accompanied by proof of the pseudorabies status of the herd 
of origin acceptable to the State Veterinarian. Such swine 
shall be inspected by a state or federal inspector or approved 
accredited veterinarian prior to sale at the market. 

(e) Healthy swine may be shipped into the state for 
immediate slaughter without a health certificate provided 
they go directly to a slaughtering establishment approved by 
the State Veterinarian, or to a state-federal approved 
livestock market or stockyard for sale to an approved 
slaughtering establishment for immediate slaughter only. 

(f) j\fl uflod in Paragraph (c)(1) of thio Rulo, a "monitorod 
vaooinatod herd" moono a h e rd in which all brooding swine 
ov e r six months of ag e have boon officially vaooinatod by on 
accredited vetorirutrian s ^ 'ith a vaocine tho titers of which can 
bo distinguished from psoudorabios fiold infections and tho 
h e rd hac paoo e d an official random sampl e toot or complete 
herd toot during th e pr e c e ding 12 months. — (From propoood 
Pseudorabies Emdication Uniform Methods and Rules of tho 
United States Department of Agriculture.) 

(f) Sporting swine: 

(1) For purposes of this Rule: 

(A) "Sporting swine" means any domestic or feral 
swine intended for hunting purposes and in- 
cludes the progeny of these swine whether or 
not the progeny are intended for hunting 
purposes; 

(B) "Feral swine" means any swine that have lived 
any part of its life free roaming. 

(2) No person shall import sporting swine into 
North Carolina unless: 

(A) The swine have not been fed garbage within 
their lifetime; and the herd of origin is vali- 
dated brucellosis free and qualified pseudora- 
bies negative; and 

CB) The swine have not been members of a herd of 
swine known to be infected with brucellosis or 
pseudorabies within the previous 12 months; 
and 
The individual animals six months of 



im 



im 



or 



over have a negative brucellosis and pseudora- 
bies test within 30 days of movement; and 
The swine have not been a part of a feral 
swine population or been exposed to swine 



1433 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



captured from a feral swine population within 
the previous 12 months: and 
CE) The swine are accompanied by an official 
health certificate or certificate of veterinary 
inspection identifying each animal by ear tag, 
breed, age, sex, the state of origin, and certi- 
fying that the swine meet the import require- 
ments of North Carolina. 
Note: Violation of this Rule is a misdemeanor under G.S. 
106-307.6, which provides for a five hundred dollar 
($500.00) fine, six months' imprisonment, or both. 

Statutory Authority G.S. 106-307.5; 106-316.1; 106-317; 
106-318. 

.0212 IMPORTATION REQUIREMENTS: 
WILD ANIMALS 

(a) A person shall obtain a permit from the State Veteri- 
narian before importing any of the following animals into 
this State: 

(1) Skunk; 

(2) Fox; 

(3) Raccoon; 

(4) Ringtail; 

(5) Bobcat; 

(6) Coyote; 

(7) Morten. Marten: 

(8) Brushtail Possum (Trichosurus vulpecula"). 

(b) Permits for the importation into this State of any of 
the animals listed in (a) of this Rule shall be issued only if 
the animal(s) will be used in a research institute inotitut e , or 
for public display or organized entertainment as in zoos or 
circuses. 

(c) Llamas, all cervidae, bioon bison, and all other 
bovidae other than domestic cattle may be imported into the 
State if accompanied by an official health certificate issued 
by an accredited veterinarian which states that: 

(1) all animals six months of age or older have 
tested negative for brucellosis within 30 days 
prior to importation; and 

(2) all animals six months of age or older have 
tested negative for tuberculosis within 60 days 
prior to importation pursuant to the guidelines of 
the United States Department of Agriculture 
Veterinary Services Notice dated December 31, 
1990, which states "the cervical test for cervidae 
is the intradermic injection of 0.1 ml. of U. S. 
Department of Agriculture (USDA) contract 
PPD Bovis tuberculin in the midcervical region 
with reading by observation and palpation at 72 
hours, plus or minus 6 hours"; and 

(3) the herd of origin has had no brucellosis or 
tuberculosis diagnosed within the past 12 
months. 

(d) Other wild and semi-wild animals, under domestica- 
tion or in custody may be imported into this state State. 
provided that a report of the number of animals by species 



is made to the State Veterinarian within 96 hours after entry 
into the otate, State and that an immediate opportunity for 
examination to determine the health status of such animal s 
is afforded the State Veterinarian or his authorized represen- 
tative. 

Statutory Authority G.S. 106-317; 106-400. 

SECTION .0300 - BRUCELLOSIS 
REGULATIONS 

.0302 BRUCELLOSIS REQUIREMENTS 

FOR SALE OF CATTLE AND SWINE 

(a) All cattle offered for public sale must test negative for 
brucellosis within 30 days preceding the date of sale except 
those cattle listed as follows: 

(1) cattle sold for immediate slaughter; 

(2) native heifers and bulls less than 18 months of 
age; 

(3) steers and spayed heifers; 

(4) officially brucellosis vaccinated heifers of the 
dairy breeds imder 20 months of age (provided 
that all officially brucellosis vaccinated heifers 
of any breed that are parturient or post parturi- 
ent must be tested and negative for brucellosis); 

(5) officially brucellosis vaccinated heifers of the 
beef breeds imder 24 months of age (provided 
that all officially brucellosis vaccinated heifers 
of any breed that are parturient or post parturi- 
ent must be tested and negative for brucellosis); 

(6) cattle originating directly from a certified brucel- 
losis-free herd; 

(7) heifers under 12 months of age purchased for 
feeding purposes; at the discretion of the State 
Veterinarian, buyers of feeder heifers under 12 
months of age may be required, before they 
remove such cattle from place of purchase, to 
sign a statement of intent to feed those cattle not 
tested for brucellosis in isolation from breeding 
animals. Willful failure of a buyer of such 
cattle to sign a statement of intent when re- 
quested by the State Veterinarian or his autho- 
rized representative or willful failure to comply 
with such a signed statement of intent is a 
violation of this Section. 

(b) All swine sold or offered for sale for breeding 
purposes must originate directly from a validated brucello- 
sis-free herd unless they originate from a state classified as 
swine-brucellosis free. 

(c) Sporting swine: 

(1) For the purpose of this Rule: 

(A) "Sporting swine" means any domestic or feral 
swine intended for hunting purposes and in- 
cludes the progeny of these swine whether or 
not the progeny are intended for hunting 
purposes: 

(B) "Feral swine" means any swine that have lived 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1434 



PROPOSED RULES 



any part of its life free roaming. 
(2) All sporting swine sold or offered for sale must 
originate directly from a validated brucellosis- 
free herd. 

Statutory Authority G.S. 106-389; 106-396. 

SUBCHAPTER 52C - CONTROL OF 

LIVESTOCK DISEASES: MISCELLANEOUS 

PROVISIONS 

SECTION .0100 - DISEASED AND DEAD 
ANIMALS 

.0105 PSEUDORABIES STATUS AND 
TESTEVG 

(a) Feeding and breeding swine may not be transported on 
any public road or held in any public place unless accompa- 
nied by a written permit from the State Veterinarian or 
proof satisfactory to the State Veterinarian that: 

(1) No pseudorabies vaccine has been used in the 
herd of origin, unless the herd is a pseudorabies 
Controll e d Vaooinat e d h e rd as d e fin e d in Titl e 9. 
Part 85. 1 of the Code of Federal Rogulations, or 
a psoudorabios monitored vaccinated herd or 
unless the use of vaccine has been approved 
under the North Carolina Pseudorabies Program; 
and 

(2) The swine were tested and found negative for 
pseudorabies within 30 days prior to movement; 
or 

(3) The swine originated from a pseudorabies-free 
area as determined by the State Veterinarian; or 

(4) The swine originated from a Qualified Pseudora- 
bies Negative Herd as defined in Title 9, Part 85 
of the Code of Federal Regulations; or 

(5) The swine originated from a monitored feeder 
pig herd; or h e rd. — For the purposes of this 
Rule, in ord e r to qualify' as a monitored feeder 
pig herd, testing must have boon porformod ia 
accordanoc with the following stimdords: 

(A^ — In h e rds of ton or fewer breeding swin e , all 
breeding owine must t e st n e gativ e within 12 
months prior to movement. 

(B) — In herds of 1 1 to 35 brooding swino, ton 
randomly s e lect e d breeding animals, (to in 
elud e gilts, sows and boars) must t e st n e gativ e 
within 12 months prior to movement. 

fG^) — In herds of more than 35 brooding swine. 
e ith e r 30 or 30 p e rcent of the total h e rd, 
which e v e r is l e ss, randomly oeleoted breeding 
gilts, sows and boars must tost negative within 
12 months prior to movement. 

(©^ — All brooding gilts, cows and boars in a herd 
shall be subj e ct to rtmdom selection for t e sting. 

(E) — Testing must bo done by use of an offioial 
pseudorabies test, as dofmod in Title 9, Part 



8 5 of the Code of Fodoral Rogulationo; Of 
(6) The swine are being transjwrted or held in 
accordance with the North Carolina Pseudora- 
bies Program. 

(b) The State Veterinarian or his representative is autho- 
rized to test swine for pseudorabies in accordance with G.S. 
106-400.1. 

(c) Swine transported on a public road or held in a public 
place in violation of this Rule are subject to quarantine and 
may be transported or held only by written permit from the 
State Veterinarian or his representative. 

{4) — As usod in Paragraph (aXl) hereof, a "monitored 
vaocirmtod herd" moons a herd in which all brooding swino 
o' i ' e r six months of ago have boon officially vaooinat e d by an 
aooredited veterinarian with a vaooin e th e titers of which oan 
bo distinguished from psoudorabios Field infoctiono and the 
herd has {xisscd an official random sample tost or oomploto 
h e rd test during th e pr e c e ding 12 months. — (From proposed 
Po e udombios Eradication Uniform Motbodo and Ruloo of tho 
United Statos Dopartmont of Agrioulturo.) 

(d) Sporting swine: 



m 



(A} 



mi 



m 



For the purpose of this Rule: 
"Sporting swine" means any domestic or feral 
swine intended for hunting purposes and in- 
cludes the progeny of these swine whether or 
not the progeny are intended for hunting 
purposes; 

"Feral swine" means any swine that have lived 
any part of its life free roaming . 
All sporting swine sold or offered for sale must 
originate directly from a qualified pseudorabies- 
negative herd. 
Note: Violation of this regulation is a misdemeanor under 
G.S. 106-22(3), and is punishable by fme or imprisonment 
of not more than two years, or both. 

Statutory Authority G.S. 106-22(3); 106-400.1. 



TITLE 10 - DEPARTMENT OF HUMAN 
RESOURCES 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the Director of the Division of Mental 
Health, Developmental Disabilities and Substance Abuse 
Services intends to adopt rules cited as 10 NCAC 14C . 1015 
- . 1018. . 1149 - . 1160, amend rules cited as 10 NCAC 14C 
.1001 - .1002, .1004- .1006, .1010- .1014, .1101 - .1102, 
.1114. .1123, .1133 - .1137, .1140. .1148; 14D .0006 and 
repeal rules cited as 10 NCAC 14C .1003, .1008. .1103 - 
.1105, .1107, .1110- .1111, .1115 - .1121, .1125 - .1131. 
.1138- .1139, .1141 - .1147. 

Proposed Effective Date: February 1 , 1996. 

Instructions on How to Demand a Public Hearing (must 
be requested in writing within 15 days of notice): Any 



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10:15 



PROPOSED RULES 



individual who wishes to demand a public hearing should 
contact Charlotte Tucker, Division of Mental Health, 
Developmental Disabilities and Substance Abuse Services, 
325 N. Salisbury Street, Raleigh, NC 27603, (919-733-4774) 
within 15 days of this Notice. 

Reason for Proposed Action: The statewide implementa- 
tion of the Pioneer Funding System and the Division 's move 
away from categorical funding sources has resulted in the 
necessity for a complete rules revision regarding accounting 
procedures for area programs and contract agencies. 

Comment Procedures: Any interested person may submit 
written comments and state the Rules to which the comments 
are addressed. These comments will be accepted through 
December 1, 1995. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government funds. 

CHAPTER 14 - MENTAL HEALTH: GENERAL 

SUBCHAPTER 14C - GENERAL RULES 

SECTION .1000 - ACCOUNTING STANDARDS 
FOR ALL RECIPIENTS OF FUNDS 
ADMINISTERED BY THE DIVISION 

.1001 EFFECT OF THIS SECTION 

The requirements of this Section shall apply to all area 
programs and their subrecipient agencies receiving funds 
administered by the Division and discussed in Section . 1 100 
of this Subchapter. 

Statutory Authority G.S. 122C- 147.1. 

.1002 MEMORANDUM OF AGREEMENT 
AND ANNUAL SERVICE PLAN 

(a) An annual plan and budgot s hall bo required from oroa 
programs befor e any stat e or f e d e ral fund s administ e r e d by 
th e Division mny b e allooat e d to an ar e a program. — Suoh 
annual plan and budgot shall bo in accordanco with Chapter 
159 of the Gonoral Statutes. The area program shall 
develop and maintain their annual budget in accordance with 
G.S. 159. 

(b) Tho annual plan and budgot of an area program shall 
bo approved by the area board and oignod by the aroa board 
chairman. The area program shall prepare and submit to 
the Division the annual service plan and Memorandum of 
Agreement in accordance with G.S. 122C-143.2. Detailed 
instructions are issued annually by the Division. 

Statutory Authority G.S. 122C-112; 122C-143.2; 122C- 
144.1. 

.1003 BUDGET FORM 

(a) — Th e annual budg e t shall b e on a standard form 



available from tho fiscal sorviooo ooction of tho Division. 

Qet) — Th e otondord form oholl require information on the 
ootimatod oxpondituroo and revenu e of the area programo. 
On an annual basis tho Divi s ion Director will iasuo inatnic 
tions which apooify tho roquirod infonnatioa. 

Statutory Authority G.S. 143B-10. 

.1004 REPORTS REQUIRED 

(a^ — iMl programs r e c e iving funds administ e red by th e 
Division shall submit quarterly roporto of roooipts and 
oxponditufos to tho Division. 

(b) — Suoh quarterly reports shall bo s ubmitted on a 
standard form availabl e from tho Fisoal s « r>'io e o section of 
th e Division. — Other formats may b e used if approved by tho 
Division. 

(c) Suoh standard form or format shall require a otatomont 
of roooipts — and e xp e nditures by major t)'peo of funds 
r e c e iv e d and e xp e nd e d during th e quart e r report e d on and 
during tho fiscal year to date. — Tho amount of suoh roooipts 
or oxpondituros s hall bo compared to tho annual budgot and 
th e amount of unrealized r e c e ipts and unexp e nd e d expondi 
tur e lin e it e ms shall be indicat e d. 

(d) Such standard forms or foi'uiat shall bo signed by tho 
area director and fiscal officor. 

( e ) Quart e rly r e ports ar e to be filed no lat e r than the 15th 
of th e month following th e quart e r b e ing r e ported upon. 
Exceptions may bo made to this date for justifiable roasons. 

The Secretary may require reports in accordance with 
G.S. 122C-144.1. 

Statutory Authority G.S. 122C-112; 122C-144.1. 
.1005 ANNUAL AUDIT REPORT 

Each program receiving funds administered by the 
Division shall submit an annual audit audit e d financial 
statomonts in accordance with requirements of G.S. 
122C 132, 122C 1 4 3, G.S. 159-34 and the Local Govern- 
ment Commission. Commisoion by th e date indicated on the 
approv e d aud i t oontroot or th e date indicated on the amended 
audit contract. 

Statutory Authority G.S. 122C-112; 122C-144.1; 159-34. 

.1006 BUDGET REVISIONS 

(a) No revision of tho budgot as doscribod in this Section 
or transf e r of funds from a cost center stat e d on th e budgot 
to anoth e r cost c e nt e r shall be mad e without th e prior 
approval of tho area board. Tho aroa board may authorize 
tho aroa program budgot officer to transfer money s from 
on e lin e it e m of e xp e nditur e to anoth e r within th e sam e cost 
center as Uotod on th e approv e d budget ordinanc e subj e ct to 
written limitations and proooduros tho aroa board proscribes. 
All such tronsfora shall bo reported to tho aroa board at its 
next regular meeting and shall b e e nter e d in tho minut e s. 
An information copy of all locally approv e d budg e t r e visions 
shall bo forv i 'ardod to tho appropriate regional office of tho 
Division to tho attention of tho regional accountant. — Area 



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1436 



PROPOSED RULES 



programs shall vorif>' that any tronafor of funds is in 
oomplionoo with the Divioion'o oooounting rul ee in this 
Sootion and Sootiop . 1 100 of thio Subchapter and Rul e .0006 
in 10 NCAC 11D and G.S. 122C 143. — The following 
budget revisions shall bo approved by tho regional ofFioo: 

f4^ any budget revioion within a oost o e nt e r or 

boP i i i eon ooot c a nters whioh would caus e division 
funds to bo transferred from one disability area 
to another or from one categorical — fund to 
another; and 

(S^ any budget r e vision ' ■ ' I 'hioh ohong e o client oor 

vices OS approved in tho annual plan and budget. 
(b) Tho Division shall monitor for budgetary complianco 
of exp e nditur e e at th e cost center total l e v e l. 

(o) Tho area program budg e t revisions shall b e on a forra 
prescribed by the Division. 

(d) Approved rovisions or transfers shall bo reflected in 
tho n e xt quart e rly report of th e ar e a program. — If th e 
revision aff e cts funds for Titl e XX of th e Social S e ourit)' 
Act. 4 2 U.S.C. 13 9 7 through 13Q7(f). the next monthly 
request for roimbursomont shall reflect tho revision. Caro 
shall b e tak e n to assur e that budg e t r e visions or e mad e 
timely for Title XX b e caus e th e Division will not honor 
monthly request — for payments — for v i hich tho apprc'ed 
budget docs not agroo with request for payment. 

(e) — The need for e ach budg e t revision shall b e justifi e d 
briefly and explicitly on th e aomo form ao th e budg e t 
revision, if space f)ormit »: — If space doos not permi tT-a 
separate form shall bo attached. 

(f) Budget reviaionii whioh roduoo oalarieo and wag e e and 
fring e benefits b e caus e of vacant positions shall includ e in 
tho justification a statement explaining how tho current coat 
for which tho lapsed salaries are to be used are to bo 
supfwrt e d in oubooquent y e ars. — Laps e d salari e s and wages 
shall not bo transf e rr e d to oth e r lin e items sol e ly to e xp e nd 
tho budget, to stockpile commoditiee or to roplaco existing 
equipment unless tho existing oquipmont con no longer moot 
tho program ncodo for v . 'hich it v i 'as purchas e d. 

(g) i\r e a programs which contract with privat e or public 
sor i 'icc providers on any basi s other than a unit cost basis, 
fixed rote basis, or fee for 6er . 'ice basis shall utilize a policy 
for budg e t r e visions no l e es string e nt than the revision 
policy that th e Division applies to th e ar e a program. Th e 
area board shall at its discretion allow the area director to 
approve budget rovisions from contractors. — It shall bo 
neceoGar)' for th e area board to incorporat e in tho minutes of 
a board mooting that th e ar e a dir e ctor has authority' to 
approve budget rovisions from contractors. 

(h) Tho Kvision shall not participate in any expenditures 
not in acoordano e with an approv e d budg e t. 

^ — Th e ar e a program shall oonsult with th e appropriat e 
regional office of tho Division for any needed clarification 
or assistance. 

Revisions to the budget must be in accordance with G.S. 
159-15. 

Statutory Authority G.S. 159-15. 



.1008 INVOICES 

Invoices us e d to bill for o e rvio e o r e od e rod by area pro 
grame shall bo on a ntondord formi — Suoh form invoio e ohall 
require such information as namo and address of purchaoof , 
invoioe date and numbor, doooription of sorviooe rwidorod 
and amount of invoio e . 

Statutory Authority G.S. 122C-112; 122C-147. 

.1010 CO^^TRACT REQUIREMENTS 
FOR AREA PROGRAMS 

(a) This Rule applies to all contracts between an area 
program (hereafter referred to as "contractor") and contract 
providers (hereafter referred to as "contractees"). For 
purposes of this Rule, contractees include: 

(1) an individual with whom a contract is made for 
professional services, including consultants and 
guest speakers; and 

(2) an ag e ncy agency, other than another area 
program, with whom a contract is made for the 
provision of services to one or more clients. 

(b) The basis for the relationship between the contractor 
and the for-profit or non-profit contractee is the written 
contract. All mutual understandings and expectations shall 
be clearly stated in the contract. Contracts botwoon a 
contractor and a profit or non profit oontraotoo, All 
contracts for provision of services to clients, shall contain, 
at a minimum, the following provisions as indicated in this 
Rule. — Minimum requiromonts for all oontracts shall bo: 
Rule, except that Subparagraphs (b'Xll) and (b) (IS) of this 
Rule shall not apply to contracts with individuals: 

(1) names of the contracting parties; 

(2) beginning and ending dates of the contract 
period; however, no contract shall extend be- 
yond the fiscal y e ar; years, except as allowed by 
G.S. 159; 

(3) detailed description of the services to be pro- 
vided and the expectations of the parties; 

(4) amount and method of payment; 

(5) address and social security number or IRS 
identification number of contractee; 

(6) the following statement when a contract period 
is greater than 30 days: "This contract may be 
terminated at any time upon mutual consent of 
both parties or 30 days after one of the contract- 
ing parties gives notice of termination;" 

(7) a statement which indicates that the contract may 
be terminated immediately with cause upon 
written notice to the other party; the cause shall 
be documented in writing to the other party 
detailing the grounds for termination; and if 
applicable, the contract may contain a provision 
indicating method of payment of liquidated 
damages uf>on such termination; 

(8) a clause which indicates that the contractor 
(area) is held harmless from acts committed by 
the contractee; 



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PROPOSED RULES 



(9) signature of each party to the contract; and 

(10) a pre-audit statement in accordance with G.S. 
159 2 8 . 159-28; 

(o) Additional roquiromonto wh e n oontmoting with a profit 
or non profit oontraotoo shall bo oo followo: 

(11) fi^ either a Division approved unit cost baais or 
the total coot basis (lino item budget) shall bo 
utilized; a statement specifying the procedure for 
budget revisions, if applicable, and provisions 
for fund balance; and a statement which in 
cludoo! 

(12) (A) the procedure for resolving disagreement 
between the contracting parties; 

(13) (^ for total ooot oontracto, for equipment pur- 
chased with non unit cost reimbursement funds, 
such as start up or special purpose funding, title 
to assets purchased under the contract in whole 
or in part rests with the contractor so long as 
that party continues to provide the services 
which were supported by the contract; if such 
services are discontinued, disposition of the 
assets shall occur as approved by the Division; 

(14) (€) client records of the contractee shall be 
accessible for review for the purpose of monitor- 
ing services rendered, financial audits of third 
party payors, research and evaluation; 

(15) (©) upon request, the contractee shall provide 
data about individual clients for research and 
study to the contractor; 

(16) (E) the contractor requirement to provide to the 
contractee all pertinent rules, regulations, stan- 
dards and other information distributed by the 
Division necessary for the performance of the 
contractor under the terms of the contract; 

(17) (F) the contractor requirement to monitor the 
contract to assure compliance with rules of the 
Commission, the Secretary and G.S. 122C-142; 

(18) (G) a copy of the independent audit referenced 
in Subparagraph (e){4) (b)(20) of this Rule, if 
required, shall be forwarded to the Office of the 
State Auditor at 300 North Salisbury Street, 
Raleigh, North Carolina 27603-5903. 

(19) (3) provisions which outline the responsibility of 
the contractee for the adoption, assessment, 
collection and disposition of fees in accordance 
with G.S. 122C-146; 

(20) ^ a requirement that the contractee shall make 
available to the contractor its accounting records 
for the purpwse of audit by State authorities and 
that the party will, when required by general 
statute or in accordance with APSM 75-1, 
Section 4.2, have an annual audit by an inde- 
[jendent certified public accountant. 

(c) Agreements with another area program for provision 
of services to clients shall be incorporated into the annual 



Memorandum of A greement referenced in Rule .1002 of 
this Section. 

Statutory Authority G.S. 122C-112; 122C-141; 122C-142; 
122C-146; 159-40; 143-6. 1. 

.1011 FUND ROUTING 

Except as authorized by the General Assemblv: 

(1) (a^ all All oommunity r e lat e d stat e and f e deral 
funds allocated by the Division for the operation 
provision of community aduk mental health, child 
m e ntal h e alth, m e ntal r e tardation, aloohol and 
drug abuo e program e developmental disability and 
substance abuse services shall be allocated to 
through the area program, program unloos other 
wio e requir e d by the grantor of ouoh funds to the 
Division. 

(2) (b) Programs providing mental hoolth, mental 
rotxirdation and oubotanoo abuse oervioos which 
oer i 'e mor e than one oatohm e nt ar e a and are not 
imd e r a looal mental h e alth authority' may r e o e ivo 
oommunity funds directly from the Division, the 
Division mav allocate and contract directly for the 
provision of non-treatment activities including but 
not limited to administration, training and preven- 
tion. 

Statutory Authority G.S. 122C-112; 122C-147.1;122C-131. 

.1012 DENIAL, DELAY OR REDUCTION 
OF PAYMENTS 

Th e flow of funds under any of the funding programs 
dioousood in Sootion .1100 of this Subchapt e r shall, oo 
determined by the Division Director, bo delayed or cancolod 
to programs which do not timely make all reports required 
by this S e ction. The Division may delay, reduce or deny 
pavments to area programs in accordance with G.S. 122C- 
151. 

Statutory Authority G.S. 122C-151. 

.1013 RECOVERY OF DIVISION FUNDS IN 
NON-COMPLLVNCE SITUATIONS 

(a) The Division shall review all non-compliance situa- 
tions occurring in area programs to determine if division 
funds were involved in the non-compliance situations. 
Non-compliance situations are those situations or actions that 
occur which are not in accordance with division, depart- 
ment, state, and federal rules, policies, regulations, or 
statutes. 

(b) The basis for determining if division funds wore 
involv e d in th e out of oompliano e situation shall bo the 
Division's effective rate of participation, if any, in the 
situation, shall be determined in accordance with Section 20 
of Volume IV of the Pioneer Funding System Operating 



10:15 



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1438 



PROPOSED RULES 



Manual. 

{^ Tho off e otiv e rat e of division participation for 
aroa matching oupported ooot ohall bo determin ed 
on on individual cost contor basis by dividing tho 
aroa matching funds allocatod for tho )'oar by tho 
total budgeted exp e ndituroo inoludod in that ooot 
o e nt e r. 
(3) TTic offootivo rato of division participation for 
tho division's catogorical funds shall bo dotor 
min e d by dividing th e oat e gorioal fund p e r ooet 
c e nt e r involved by the total budg e t e d e xp e ndi 
turog in tho coot oontor or cost contors Lnvolvod. 

(c) Division participation in non-compliance situations 
shall be recovered through receipt of a check or by reducing 
the current year's allooation of payment of allocated division 
funds otherwise due the area program . Tho Regional 
Director shall notify' tho Director of tho aroa program of the 
propo se d re > duotion and th e r e aoono for tho reduction on a 
standard form to bo provided by the fiocal o e r < 'io e o oeotion 
of tho Division. — Throo oomplotod copies of this form shall 
bo sent to tho Division's chiof of Fiscal sorvicoe by tho 
R e gional Director so that neoeooar)' accounting e ntrioo to 
r e fl e ct th e r e duction con b e record e d in th e Division's 
accounting rocorda if no app>oal is Filed in accordanco with 
(f) of this Rule. — If tho Division's allocation for tho Fiscal 
y e ar has already boon dmv . Ti dov i Ti wh e n th e non complianc e 
situation b e com e s known, th e The area program shall 
reimburse the Division within 60 days of being invoiced or 
notified of the required payback, unless notiFication of 
appeal is rendered by the Area Authority . 

(d^ — If, for th e Fiscal y e ar in which th e non complianc e 
situation occurred, the offoctivo participation rate at tho ond 
of tho Fiscal year basod on actual annual expenditures is 
diff e rent than the rat e us e d at th e tim e of th e r e duction of 
division funds, an adjustment shall be made to r e fl e ct th e 
increased amount duo to tho Division or to credit tho amount 
overpaid by tho area program against any amount duo. — H 
no amount is du e from the area program V i hioh con b e 
cr e dit e d with the ov e rpniymont, the Division shall r e fund th e 
overpayment from available funds within tho operating 
budget p>onding any nocessar>' approval required by tho 
Division of Stat e Budg e t. 

( e ) I'Vny non complianc e amount d e t e rmined at th e e nd of 
the Fiscal year in tho Division' s tentative settlement report 
s hall bo handled in a mannor consistent with (b)(1) and 
(b)(3) of this Rule. 

(d) (f) If the Director of the area program disagrees with 
the non-compliance decision, thea within 60 days of receipt 
of the notiFication of non-compliance, the Director of the 
area program shaii may send to the Division Director a 
request for appeal pursuant to G.S. 122C-145, 122C \A1 
and 10 NCAC IK .0900 (DHR Administrative Standards). 

(e) (g) Pending the final agency decision on the appeal of 
the non-compliance decision, the Division shall not with- 
draw or reduce the amount of funds due the area program. 

Statutory Authority G.S. 122C-112; 122C-147. 



.1014 EXPENDITURE OF DIVISION FUNDS 

SETTLED ON AN EXPENDITURE BASIS 

(a) The Division shall allow area programs to may budget 
division catogorical funds within cost centers that also 
include, but are not limited to, local funds, aroa matching 
funds, federal funds or other division oategorioal funds. 
When area programs elect to budget division oat e gorioal 
fiinds within a cost center that is settled on an expenditure 
basis with such other funds, funds shall be considered to 
have been expended in the following order: th e Division 
shall oonflid e r th e Division oategorioal funds to b e exp e nd e d 
under tho following criteria: 

fi) For area program op > oratod oor i 'ioos! 

(1) (A) special grants from non-divisional sources 
that are for reimbursement of the same expendi- 
tures as those for which divisional categorical 
funds are appropriated (examples are grants 
from R.J. R e ynolds , the Department of Public 
Instruction or Division of Youth Services - 
Community-Based Alternative Funds); 

(2) (B) block grant funds federal funds from the 
Division; and 

(3) (G) state oat e gorioal funds from the Division. 
Revenue from non-divisional sources and block 
grant funds shall be deducted from total cost 
center expenditures for the purpose of determin- 
ing the net cost upon which the state oat e gorioal 
share is based. Client-earned income, such as 
payments received from patients or third parties 
(insurance, Medicare, Medicaid), which is 
received but not expended shall be retained by 
the area program, or tho contract program and 
bo UBod to further tho objoctivoa of tho logisla 
tion establishing the stat e oat e gorioal funding. 
When olient e arned incom e rooults in on ar e a 
program's fund balanoo being in oxooas of 15 
percent of its annual — operating budget. — tb© 
amount in e xo e so of 15 percent shall b e handl e d 
in aooordanoo with the Division's rule on fund 
balances, Rule .1125 of this Subchapter. 

(3) For contracted programs: 

(A) Th e ar e a program shall e otablish on e xp e ndi 
tur e and fund balanc e policy. 

(B) For contracted sor i 'icos, each contract shall 
detail how tho oxpondituro and fund balanco 
policy will apply to th e contract e d o e r < 'ic e . 

(€) If th e ar e a program contracts with a provid e r 
that also provides non aroa program oontrao 
tual ser i 'iooQ, tho contracted provider shall bo 
r e quir e d to id e ntify the fund balano e for th e 
ar e a program contract e d s e rvic e only. 

(b) Expenditures for Social Services Block Grant total 
cost programs shall continue to bo budgeted and expended 
in aooordano e with applioabl e Titl e XX matohing formul a 
and e Ugibilit)' crit e ria. Settlement of Willie M. and TTiomas 
S^ funds shall be in accordance with Rules .1 136 and .1 148 
of this Section, respectively. 



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PROPOSED RULES 



nftof apooittl granto from non divioional oouikmw bo long aa 
th e o e funds do not supplant local or stat e funds. — For th e 
purpos e of d e termining wh e th e r blook grant fundo ore boing 
uflod to supplant looal of state funds within a ourfont yoof, 
the prior year oxpondituro data shall bo used. — All rovonuo s 
r e tailting from th e blook grant funded projoot shall bo uood 
by th e s e rvic e whioh produced the r e v e nue. — If e xisting 
9or>'ico8 cannot bo oxpandod or now sor^'icos started, tho 
rovonuos shall bo used to roduoo the amount of block grant. 

Statutory Authority G.S. 122C-112; 122C-147. 



(o) State and Social Sor^'icoo Blook Grant adult develop 
mental activit)' program funding ohall, unleoo a total coot 
method of roimburoomont is authoriE e d by tho Division, b e 
baaod upon a unit ooot rato determined by ooot studies 
conducted by division staff. — Tho roimburoomont rato shall 
b e boo e d upon actual n e t cost (total ooot l e ss oth e r oourc e a 
of support) or tho otatewido maximum rate, whichever is 

(d) State subsidy payments for dovolopmontal disabilitios 
da)' pare and d e velopm e ntal dioabilities community resid e n 
tial o e n'ioo shall continu e to b e r e imbursed on a statewid e 

(o) Block grant fundo shall bo the first dollar expended 

.1015 FUND BALANCE: COMPUTATION FOR AREA PROGRAMS 

(a) In order for the Division to have input into the actions regarding fund balances in area programs, the following shall 
take place after the certified public accountant's audit report is rendered and the tentative settlement report prepared: 

(1) The fund balance set forth within the annual audit of area programs shall be verified by the Division. 

(2) Since single county area programs are considered a department of the county for budgetary and financial 
reporting, separate fund balances for the single county area programs are not required. In order to assure that 
single county area programs are in compliance with the G.S. 122C-146 which states that fees received for 
services shall not reduce or replace the budgeted commitment of local tax revenue, the Division shall review the 
utilization of county general funds and the disposition of fees received for service each year. 

(3) To determine the unrestricted fund balance for a multi-county area program or single county area program which 
maintains a separate fund balance and the percent that it represents to the operating budget, the Division shall 
use the following format: 



Current Assets Per Audit Report 
Less: Current Liabilities Per Audit Report 
Fund Balance 
Less: Reserve for Encumbrances 

Reserve for Patients Accounts Receivable 
Less: Allowance for Doubtful Accounts Patient 
Accounts Receivable 
Reserve for Accounts Receivable from Governmental Entities 
Reserve for Inventory 
Reserve for DWI Fees 
Reserve for Drug Education School Fees 
Reserve for Restricted Donations 
Fund Balance Restriction Previously Approved by 

DMH/DD/SAS 
Willie "M" 



Thomas S^ 
Other(List) 



$ 




L 


1 


%. 




i 


1 


i £ 


i 


i 


1 


L 


i 


L 


i 


i 


1 


i 


i 


i 


1 


L 


i 


£ 


i 


i 


1 



Unrestricted Fund Balance 



Currently a pproved budget including expansion 



Percent Unrestricted Fund Balance to Current Annual Budget 



percent 



£4} If the unrestricted fund balance is not in excess of 15 percent of the current annual budget, no action is to take 
place. 

(5) If the unrestricted fund balance is over 15 percent of the current annual budget, the Division shall recoup in 
an amount equal to the fund balance in excess of J_5 percent in accordance with Tentative Settlement Report 
procedures per APSM 75-1. Section 4.3. The area program may request permission from the Division Director 
to restrict fund balance in excess of the 15 percent limitation for specific purposes. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1440 



PROPOSED RULES 



(h) The amount of reduction of financial support by the division to area programs as referenced in Subparagraph (a'XS) 
of this Rule may be decreased and/or delayed if there are extenuating circumstances which, in the opinion of the Division 
Director, warrant relaxation of this policy. Any action taken in regard to this Paragraph shall be documented in writing. 



Statutory Authoritx G.S. 122C-1 12(a)(6): 122C-144; 122C-146; 122C-147; 143B-10; 159-8. 



.1016 DISPOSITION OF EQUIPMENT - NON UCR 

(a) Equipment costing five thousand dollars ($5.000) or 
more purchased with non-UCR Division funds by an area 
program or contract provider shall be used for Division 
funded client services. Except for Willie M and Thomas S^ 
funded purchases, equipment purchased with Division funds 
may be transferred to other Division funded ser.'ices if no 
longer needed by the original service. Willie M and 
Thomas S^ purchased equipment shall be used only for 
Willie M or Thomas S^ clients or disposed of in accordance 
with Rule . 1 136 or . 1 148 of this Subchapter. 

(b) Except as stated in Paragraph (c) of this Rule, should 
transfer of equipment to Division funded services not be 
possible, the Division shall be contacted by the area pro- 
gram or through the area program for a contract provider 
for disposition instructions. The Division will recover the 
Division's share of the fair market value. The Division's 
share will be established by the following methods in order 
of preference. 

( 1 ) Through inventory records which establish the 
percent of funding for the equipment. 

(2) The Division's percent of participation for the 
area program for the year of purchase. 

(3) Tlie Division's percent of participation for the 
area program for the current year. 

(c) Equipment which is fully depreciated and no longer 
has any useful value may be disposed of in accordance with 
area program policy. 

(d) Tlie area program will have a written procedure 
stating the equipment disposition policy for contract provid- 
ers and include or reference this provision in aH contracts 
between the area program and the contract provider. 

Statutory Authority G.S. 122C-147. 

.1017 START UP FUNDING 

(a) The Division may provide funding outside of UCR for 
initial purchases of equipment, supplies and operational 
expenditures for the establishment of a program, ser\'ice or 
facility. 

(b) Requests for start up shall be made by the area 
program, or through the area program in the case of a 
contract provider, in whose catchment area the new pro- 
gram, service or facility is being established. Requests shall 
be made in writing to the Division Director or designee and 
shall include a line item budget and justification. Requests 
may include expenses for normal operation such as staff, 
utilities and rent but such request may not exceed 60 days 
without specific written authorization. Approvals will be 
granted based on availability of funds and merit of request. 



Statutory Authority G.S. 122C-147. 

.1018 AREA AUTHORFTY FINANCIAL 
FAILURE DEFINED 

(a) An area authority is in imminent danger of failing 
financially if the Division determines at any time that one or 
more of the following conditions are met: 

(1) The projected annual expenditures of the area 
authority exceed the sum of the projected annual 
revenues and fund balance of the authority and 
the governing board of the authority has not 
demonstrated an ability or willingness to take 
appropriate action to correct the imbalance: or 

(2) The area authority has not complied with the 
reporting requirements of G.S. 122C-124. as set 
forth in the annual Memorandum of Agreement 
between the Division and the area authority. 

fb) An area authority is in imminent danger of failing to 
provide direct service to clients if it is in imminent danger 
of failing financially as defined in this Rule. 

Statutory Authority G.S. 122C-125. 

SECTION .1100 - STATE AND FEDERAL 
FUNDS ADMINISTERED 

.1101 METHOD OF PAYMENT 

(a) Grontfl d e oorib e d in thio Section shall bo made for tho 
ficool y e ar. 

(fe) An advance of 1/12 of tho total annual allocation of 
grants shall be made to tho area program at tho beginning of 
tho fiooal year. — Advano e m e nto of more than 1/12 may bo 
mad e if jiuitifi e d and authorized by th e Divioion. — Applioa 
tions for advonoomonts of moro than 1/12 shall bo made in 
writing. 

(e) Funding oubsoquent to tho advono e m e nt shall bo mado 
on a monthly or quart e rly basis- 
Payment will be based on earnings, monthly advancement 
or other basis as authorized by the IDivision and stated in the 
Memorandum of Agreement. 

Statutory Authority G.S. 143B-10. 

.1102 REQUEST FOR FUNDS 

A monthly or quart e rly request for funds administered by 
the Division and paid on a basis other than unit cost earn- 



ings and alf<Midy ollocatod to tho aroa program and doooribod 
in this S e ction shall be on a standard form format available 
from the fiscal services section of the Division. Such 
standard forms shall roquiro inforrration on typo of payment 
requested (whether advance or on a roimburoomcnt basis). 



1441 



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10:15 



PROPOSED RULES 



the baoia of tho roport (wbothor cash or nooruod oxpondi 
turoo), tho grant ee idontifying numb e r, the month oov e red, 
name of grant e e organization, tho name of th e pay e e if 
different from grontoo, computation of tho amount ro 
quoBtod, tho annual budget amount and tho name and 
signature of tho authorized official submitting tho r e qu e ot. 
Request shall be submitted to the Fiscal Office as directed 
by the Division Director. 

Statutory Authority G.S. J 43 B- 10. 

.1103 AREA MATCHING FUNDS 

(a) Eligibility'. Tho Division shall mako available to aroa 
progromo ar e a matching funds appropriated to th e Division 
under tho authorization of G.S. 122C 1'19. To b e e ligibl e 
for such fiinda an area program shall moot tho roquiromonts 
of tho Btondiu-ds in 10 NCAC 1 8 M regarding foquirod 
sorviooo and shall hav e an approv e d annual plan. 

(b) Match Basis. — Ar e a matching funds shall be grant e d 
to aroa programs on a matching basis. — Tho amount of tho 
match shall bo as dotorminod by tho Division's abilit)' to 
fund formula for each program, but shall bo no l e ss than 
one for on e (50 poroont) or more than nine for one (90 
percent) subject to available state appropriations. 

(c) Matching Monios. — Local monies that are eligible for 
matching with state monies under G.S. 122C HQ include, 
but are not limited to tho county and city general fund, 
voluntary' contributions, patient fees, insurance rocoipts. 
Medicare, federal and local share of Medicaid, ABC five 
c e nto on th e bottl e , and ABC s e v e n p e rc e nt profits. — Local 
monios e xp e nd e d for rental or purchas e of office or facility 
s pace, and for renovation of buildings shall not bo eligible 
for matching funds. — But local monios oxfwndod for pur 
chas e of motor v e hicl e s wh e n th e e nd result would b e a cost 
r e duction or for r e nting e quipm e nt wh e n such e quipment is 
clearly more justifiably rented than purchased may be 
eligible for matching with aroa matching funds. 

(d) Application. — Application for ar e a matching funds may 
b e mad e by submitting an annual plan and budg e t to th e 
appropriate regional office. 

(o) Allocation Among Regional Officoa. — Aroa matching 
funds shall b e allocated annually by th e Dir e ctor of th e 
Division among the regional offic e s. 
(I) — Allocation of Funds. 

(4) Each Regional Director at the discretion of the 

Division Dir e ctor shall — allocat e — among th e 
e ligible programs of his region th e ar e a match 
ing fund s allocated to his region. 

(3) Priority for allocating fiinds will bo dotormin ed- 

e ach y e ar by th e Division Director in accordanc e 
with approv e d annual plans. 

Statutory Authority G.S. 122C-112; 122C-149; 143B-10. 

. 1 104 FUNDING GROUP HOMES FOR 

EMOTIONALLY DISTURBED CHILDREN 

(«3 Pursuant to G.S. 122C 150, tho Division shall 



administof a program of grants to area programs to bo 
call e d funds for group homes for e motionally disturbed 
childr e n. 

(b) Such gnmts shall bo usod to support group homo s for 
emotionally disturbed children. 

(e) — Funds for group homos for e motionally disturbed 
childr e n shall b e administ e r e d to ar e a programs as direct 
grants and do not require local matching. 

(d) — Programs may spend funds for group homos for 
e motionally disturb e d children for th e following: 

ft) to r e nt or loaso fooilitiooi 

(3) fiimitufo or speciolizod equipment for residents' 

(3) transportation of residents; 

f4) oth e r nooosoor)' of> e rating e xp e nses as approved 

by the Division; and 

(5) tho purchase, construction or alteration, im 

provomont or repair of a facility by the area 
program or a non profit board with division 
approval. Th e program shall m ee t th e r e quire 
monts of tho following! 
fA) — The Group Homo Mortgage Payment Program. 
Th e Division may participat e in th e mortgage 
payment program in part or in total dependent 
upon tho availability' of s tate funds. 
(^ — ?%e — Group — Heme — Purchase/Construction 
Program. 

(i) Th e Division may participat e in the down 

payment and lump sum purchase or con 
stniction of a group homo in whole or part 
contingent upon th e availability of stat e 
fiinds. 

fii) Tho area progmm or non fHofit board shall 

secure two property appraisals for review 
and approval by th e Division prior to 
purchas e ■ 
(i«) — If a now construction grant is requested, 
tho aroa program shall submit two con 
struotion bid contracts from tv . 'o building 
contractors to th e appropriate regional 
office for review and approval prior to 
construction bid letting. 
(€) — A requ e st for initial renovation of a newly 
acquired — facility of fiv e thousand dollars 
($5,000) or loQO shall bo submitted to tho 
appropriate regional office of tho Division for 
approval. — Initial minor r e pairs to facilities of 
less than on e thousand dollars ($1,000) shall 
bo approved by tho area program. 
(©) — A request for alteration or improvement of an 
e xisting facility' in excess of fiv e thousand 
dollars ($5,000) shall be forv v 'ard e d to th e 
Division Director's office through the appro 
priate regional office of the Division for ap 
proval. 
^ — Each request aa outlin e d in (d)(5)(B) and (D) 
of this Rulo shall bo accompanied by a narra 
tive that explains the need for the purchase. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1442 



PROPOSED RULES 



construotion. altomtion, improvomont or repair 
of tho facility and a oopy of th e sob e matio 
drawings and spooifioationo. — If approved by 
the Division of Mental Health, Montal Rotar 
dation and Subotanoo Abuso Sorviooa, thoeo 
dmvvingD and opooifioationD oholl b e forv i. 'ard e d 
to tho Division of Facility S e rs'iooo for roviow 
and approval. 
(F) — If tho group homo is operated by a non profit 
board, the ar e a program shall sign a legally 
binding oontraot with th e private non profit 
agency for either tho mortgage paymonta to bo 
mndo or the purchase or construction program 
as indicated in (A) and (B) of (d)(5) of this 
Rul e . — A oopy of th e appropriat e oontraot shall 
bo obtained from the controller's office of tho 
central offico of tho Division. 
{&) — If a facility own e d by an ar e a program or its 
privat e non profit contract ag e ncy wao pur 
chased. — altered, — improved, — or rehabilitated 
using division fiinds and lator ccosos to bo used 
in tho delivery of o e r i 'io e s to cli e nts by th e 
area program or its privat e non profit oontraot 
agency, tho facility shall bo sold at tho current 
fair market value as determined by tv . 'o inde 
p e nd e nt appraioolo aoo e ptablo to the Division. 
Tho Division shall b e reimburs e d a pro rata 
share of the proceeds of the sale based on tho 
percent of contribution made by the Division 
in tho purohoo e , alt e rnation, improv e m e nt or 
rehabilitation. — Th e ar e a program shall main 
tain records — on a oontinuouo basis v i 'hioh 
rofloct tho amount of contribution for pur 
chas e , alt e ration, improv e m e nt, or r e habilita 
tion by the Division, ar e a program or other 
funding entity. 
(e) — Fund Balance. 

(i^ Th e Division may allow group homos for omo 

tionally disturbed children to maintain a fund 
balance of no more than — 15 percent of th e 
current annual budget for tho group homo. 

(3) Th e 15 p e rc e nt fund balanc e shall b e g e n e rat e d 

e ntir e ly by non stat e funds. 

(^) The Division may docroaoo state appropriation to 

a group homo, thereby necessitating tho group 
hom e to utiliz e its fund balanc e , if th e stat e 
appropriation is required in order to continu e 
operations at another home. 

(43 The 15 percent fund balance allowed shall bo in 

addition to th e amount th e Division would allow 
to r e main in th e fund balanc e du e to r e strict e d 
donations. 

{&^ Except for tho roatricted donations and tho 15 

p e rc e nt fund balanc e , funds for group hom e s for 
e motionally disturb e d children shall be e xp e nded 

(6) An allowance for a fund balance for group 



homos that oro opwratod by on area program is 
mad e in Rul e .1125 of thio Sootioni 

(f) — To apply for funds for group homos for emotionally 
disturbed children, an annual plan and budget for such funds 
shall bo included in tho appropriato area program's total 
annual plan and budg e t packag e wh e n it io submitt e d to tho 
appropriat e r e gional offio e of the Division. 

fg) — Funds for group homes for emotionally diaturbod 
childron shall bo allocated among tho regions of tho Division 
by th e Division Dir e ctor. 

(h) Boood on th e appro' i ' e d annual plan and budg e t roquoot 
submitted and availability of fund s , allocations of funds for 
group homos for emotionally disturbed childron to aroa 
progrtmifl within e ach r e gion shall be made by th e Division 
Dir e ctor or his d e sign ee- 

Statutory Authority G.S. 122C-1 12(a)(6); 122C-131; 
122C-147; 122C-150; 143B-10. 

.1105 FUNDING EARLY INTERVENTION 

FOR THE EMOTIONALLY DISTURBED 

{tt) — In furth e ranc e of G.S. 122C 150 tho Division shall 
maintain a program of granto to programs for tho e stablish 
mont of local programs of consultation, training, diagnosis, 
and trcatmont of emotionally disturbed childron, ages birth 
to s e v e n y e ars and to th e familieo of suoh ohildron. — Tbe 
focus of thooo programs shall b e : 

(4^ to improve the quality of child care environ 

monta through tho training of day core workers, 
nurs e ry school teach e rs, — par e nts, and others 
involv e d in child car e ; 

(3) to identify', through sorooning and diagnosis, 

those children with emotional and other develop 
m e ntal probl e ms; and 

(3) to provide remedial programs e ith e r through 

consultation or through spocializod thompoutic 

proschool programs to those childron and their 

familieo identifi e d ao b e ing in nood. 

(fe) — Funds for e arly int e rv e ntion for th e emotionally 

disturbed shall bo administered to area programs as direct 

grants and shall require no local matching. 

(e) — Funds for th e e arly int e p . ' e ntion for tho emotionally 
disturb e d may b e utiliz e d for r e pairs and maintenonoo of 
faciUtiofl which roprosont normal upkeep and do not materi - 
ally increoao the value of tho facility or extend its useful 

(4) — To apply for funds for early intep i 'ontion for th e 
emotionally disturbed on annual plan and budget for such 
funds shall bo included in the appropriate oroa program's 
total annual plan and budg e t packag e wh e n it is submitted to 
th e r e gional offic e of th e Division. 

(e) — Funds for early intervention for tho emotionally 
disturbed shall bo ollooatod by tho Diroctor of tho Division 
among th e r e gional offic e s. 

(Q — Baa e d on th e annual plan and budg e t submitt e d and 
availabihty of funds, allocation of funds fof early intorvon 
tion for tho emotionally disturbed to area programs within 



1443 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



oaoh rogion ohall bo mado by the Rogional Diroctor with the 
oonourronoo of the Divioion Dirootor. 

Statutory Authority G.S. 122C-112; 122C-150; 143B-10. 

.1107 COMMUNITY SUBSTANCE ABUSE FUNDS 

(a) The Divioion ohall adminiotor a program of granto to 
area programa to bo called Communit)' Substtinco Abuoo 
Funda. — Those funds shall bo adminiatorod as direct granto 
not requiring local matob T 

(b) — Programc operated by an area program or contract 
programs of the area progmm arc eligible for funding of th e 
following oxpondituroo: 

fi) otafFmg; 

trav e l; 



(3)- 

(5) aupplieo; 

f4) administrative and program equipment; 

(5) rent or l e oo e of a r e sid e ntial facility; 

(j^ other n e oeooar)' program noodo ao approv e d by 

the Division; and 

f?) repairs and maintenance — of facilities which 

roproQont normal upkeep and do not materially 

increas e the value of th e facility or ext e nd its 

useful life. 

(c) Community' Substance Abuse Funds may bo used for 

th e purchoDO, construction or alt e ration, improv e m e nt or 

repair of a r e sidential facility' by th e ar e a program or a 

nonprofit board under contract with the area program with 

division approval. — The program shall meet the following 

requirem e nts: 

(4^ Th e R e sidential — Faoilit)' — Mortgag e — Paym e nt 

Program. — The Division may participate in the 
mortgage payment program in port or total 
oontingont upon th e availability' of state fundoj 

(3) Th e R e sidential Facility Purchas e /Construction 

Program. 
(A) — The Division may participate — in the down 
payment and lump sum purchas e or oonotruo 
tion of a r e sid e ntial facilit>' in whol e or part 
contingent upon the availability of state fund s . 
^S) — The area program or nonprofit board shall 
s e cur e two prop e rty appraioolo for r e vi e w and 
approval by the Divioion prior to purohooe. 
^G) — If a now construction grant is requested, the 
area program shall submit two construction bid 
contracts from t>vo building contractors to the 
appropriate regional office for r e vi e w and 
approval prior to construction bid letting. 

(3) A request for initial renovation of a newly 

acquired faoihty of five thousand dollar s ($5000) 
or l e ss shall b e submitt e d to th e appropriat e 
regional office of the Division for approval. 
Initial minor repairs to facilitios of loss than one 
thousand dollars ($1000) ohall b e approv e d by 
th e area program. 

(4) A request for alteration or improvement of an 

existing facility — in oxcoss of five thousand 



doUaro ($5000) shall bo forwardod to the Divi 
o ion Dir e ctor's offic e through th e appropriate 
rogional offic e of the Division for approval. 

(5) A requoot for alteration or improvemopt of an 

existing facility of five thousand dollars ($5,000) 
or loss shall b e submitt e d to th e appropriat e 
r e gional offic e for opproval. 

(6) Each request as outlined in (o) (2) and ( 4 ) of thi s 

Rule shall be accompanied by a narrative that 
e xplains tho nood for the purohaoo, oonDtruotiont 
alteration, improv e m e nt or r e pair of th e facility 
and a copy of tho schematic — drawings and 
s pooifioations. — If approved by tho Division of 
Mental Health, M e ntal R e tardation and Sub 
otanoo Abus e S e r < 'io e s, — th e s e drav i 'ings and 
gpecifioationfl shall bo forv ^ 'arded to tho Divioion 
of Facility Sor . 'ioo8 for review and approval. 

(p^ If th e residential facility is op e rat e d by a non 

profit board, th e aroa program shall sign a 
legally binding contract with the private non 
profit agency for either tho mortgage payments 
to bo made or th e purohoo e /conotruotion program 
ao indicat e d in (c) and (1) and (2) of this Rule. 
A copy of tho appropriate contract s hall bo 
obtained from tho Fiscal Service s Branch of tho 
c e ntral office of tho Division. 

(8) If a facility own e d by an ar e a program or its 

private nonprofit contract agency was purchaood, 
altered, improved or rehabilitated using division 
fiindo and later coasea to b e us e d in th e deliver)' 
of oor>'icoo to cli e nto by th e ar e a program or its 
private nonprofit contract agonoy, the facilit)' 
s hall bo sold at tho current fair market value as 
d e t e rmined by two independent appraioolo ao 
c e ptabl e to th e Divioion. Th e Divioion shall bo 
reimbur s ed a pro rata share of tho proooods of 
the sole booed on tho p>orcont of contribution 
made by th e Division in th e purohoo e , alteration, 
improvement or rehabilitation. — If an ar e a pro 
gram or its oontroot progrom wishoo to retain o 
facility that was purchased, altered, improved or 
r e habilitated uoing fundo for Communit)' Sub - 
otano e Abuse Fundot the aroa program or its 
oontmot program shall pay to the Division a pro 
rata shore of the current fair market value of the 
facility as d e t e rmin e d by two independ e nt op 
proisalo oooeptablo to th e Division boo e d on 
contribution mode by tho Division in the pur 
choflo oltorotion, improvement or rehabilitotion 
of th e focilit)'. This provision may be waived by 
th e Divioion Dir e ctor Ufwn V i 'ritten request of tho 

progrom. Tho area program shall mointoift 

records on o continuous bosis which reflect tho 
amount of contribution for purohoo e , olt e rotion, 
improvement or rohobilitation by th e Divioion, 
area program or other funding entity. 
(d^ — Fund Balance. — Tho Divi s ion may allow area pro 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1444 



PROPOSED RULES 



grama or contmct progmms to tnaintain a fund balonco of no 
mor e than — 15 poro e nt of th e curr e nt annual budg e t in 
aooordano o with Rul e .1125 of thio Sootion. 

(^ — For an area program to apply for community' sub 
stanoo abuse funds, an armuxil plan and budget for auoh 
fundo shall b e inoludod in tho appropriate oroa program's 
total annual plan and budg e t packag e wh e n it is oubmJtted to 
the appropriate regional office of the Division. 

{4) — Based on tho annual plan and budget submittod and 
availabiUt>' of thes e funds, allocationo shall b e mad e y e arly 
among area programi i by th e Dir e ctor of th e Division or his 
designee. 

Statutory Authority G.S. 122C-112; 122C-147; 143B-10. 

.1110 SOUTH CENTRAL REGIONAL 

ALCOHOLISM PROGRAM FUNDS 

(a) In furthoranco of tho authorization of G.S. 122C 1 8 1, 
adopted pursuant to G.S. 150B l1(o). th e Division shall 
administer a program of grants to bo known as south central 
regional alcoholism program funds. 

(b) South central regional alcoholism program fundo shall 
bo mad e a' . 'ailable to th e south c e ntral r e gion by tho Division 
for alcohol programs in area programs to help eomponsato 
for that region's not having on alcoholic rehabilitation 
c e nt e r. — These fundi; shall b e us e d to suppl e ment the e xisting 
alcoholism programo and to provide oood money svher e an 
alcohol program does not exist. 

(c) South central regional alcoholism program funds shall 
bo administer e d to ar e a programs oo dir e ct gronto not 
requiring local matching. 

(d) South central regional alcoholism program funds may 
bo utilized for repairs and maintenance of facilities which 
r e pr e s e nt norrml upkeep and do not mat e rially inor e ao e th e 
' ■ alue of the faoilit)' or e xtend itc U£i e ful lif e . — If approv e d on 
an individual basis, purchasos of equipment as well as 
payment of minor renovation expenses shall be allowable 
uses of south central r e gional alcoholism program funds. 

fe^ To apply — for south c e ntral — r e gional — alcoholism 

program funds, an annual plan and budget for such funds 
shall be included in the appropriate area program's total - 
annual plan and budget package when it is submitt e d to th e 
r e gional offic e of th e Division. 

ff) — Based on tho armual plan and budget submittod and 
availability' of funds, allocation of south central regional 
alcoholism program funds to area programs is mad e by th e 
south c e ntral R. e gional Dir e ctor with th e oonourr e no e of th e 
Division Director. 

Statutory Authority G.S. 122C-112; 122C-181; 143B-10. 

.1111 DRUG ABUSE NLVTCHING FUNDS 

(a) Under G.S. 122C 1 4 7 the Division shall administer a 
program of grants to ar e a programc to provid e funds for 
s e p i 'io e s relative to th e tr e atment and pr e v e ntion of drug 
abuse. 

(b) Drug abuse matching monies shall be administered to 



area programs on a match basis. — Tho match ratio for each 
area program shall b e in oooordono e with Rul e .1103(b) of 
this Sootion. 

(c) Local monies that are oligiblo for matching with state 
drug abuse matching funda shall include, but shall not bo 
Limited to, th e oount)' and oity gonorol fundo, oontributiono, 
pati e nt and drug fooo, and umurano e and M e diooid roooipto. 

(d) Subject to tbo availabilit>' of state drug abuse nmtohing 
furtdfl tho E>ivi3ion Diroctof of hia dooignoo may approve tho 
use of these fundo to provid e tr e atm e nt s e rviooo to inoaroor 
at e d cli e nts provid e d that no mor e than 25 p e rcent of tho 
clients boing served by tho program may bo incarcerated. 
iMthough incarcerated, tho following olionto ore excluded 
from tho 25 percent limitation: 

(43 oliento who have boon admitt e d to tr e atm e nt and 

are serving on tho first 30 days of their son 
tence; 

(3) clients who havo 60 days remaining to oen^e 

prior to r e l e ao e from inoaro e mtion; and 

(^) clionts incarcoratod in local jails and juvooilo 

detention facilitioo. 
(e) — Local e xp e nditur e s for r e pairs and maintononoo of 
faoUiti e e which repres e nt normal upkeep and do not materi 
ally inorooflo tbo value of tbo facilit)' of extend its uaoful life 
shall bo oligiblo for inatching with drug abuse matcM Bg 
funds. — Approval of e xp e nditures for rent and equipment 
rtay b e made on an indi' i 'iduol baoie by tho Division Dirootor 
or his designee. 

(0 V i ^on costs of personnel are shared by more than ono 
drug grant, a time distribution r e cord shall bo maintainod 
for each staff m e mb e r p e rforming s e r^'ioos charged to 
separate grants. 

(g) To apply for drug abuao matching funda on application 
for such fundo shall b e submitt e d by tho ar e a program 
simultan e ously to th e appropriat e R e gional Dir e ctor and to 
tho Doput)' Director for substance abuso. — j\n annual plan 
and budget for such funda shall also bo included in tho area 
program's total annual plan and budg e t package. 

(h) The Regional Dir e ctors shall r e commend to th e 
Doput)' E)iroctor for substance abuse the allocation of drug 
abuse matching funds to oligiblo area programs within theif 
regions. 

ft) — Based on th e annual plan and budg e t submittod and 
availability of fimds, allocation of drug abuse funds to area 
programs shall bo mode by tbo Division Director or bis 
d e sign ee . 

Statutory Authority G.S. 122C-112; 122C-113; 122C-147; 
122C-150; 143B-10. 

.1114 EARLY INTERVENTION - STATE 
AND FEDERAL FUNDS 

(a) Tbo Division shall administer a program of grants to 
ar e a programs to b e oall e d fundo for e arly int e p i 'ontion for 
childr e n with m e ntal r e tardation or oth e r d e v e lopm e ntal 
disabilities. 

(b) Such gronta shidl bo uaod to provide for tho establish 



1445 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



mont of local multidi8ciplinar>' toamo for tho proviaion of 
program oonoultation, family support and family oonter e d 
training for preoohool ohildron, (d e fin e d as those who hav e 
not roachod thoir fifth birthday on or before October 15 of 
tho ochool year) within tho following guideliDoo: 

fi) Childr e n oor^'ed shall bo mentally r e tard e d, 

dov e lopmontoll)' d i sabl e d, d e v e lopm e ntally 

delayed or have at)'pical dovolopmont or bo at 

risk for one of those conditions. 
(3^ Priorit)' shall b e given to thos e childr e n und e r 

three years of ag e . 

(c) To apply for funds for early intor i 'ontion, an annufll 
plan and budget for such funds shall bo included in the 
appropriate aroa program's total armual plan and budg e t 
package wh e n it is submitted to th e r e gional offio e of th e 
Division. 

(d) Funds for early intor i 'ontion s hall bo allocated among 
th e r e gions of th e Division by th e Division Director. 

(o) Boo e d on the approv e d annual plan and budget request 
submitted and availability of funds, allooation of funds for 
oarly intorvontion to area programs shall bo approved by tho 
Division Dir e ctor or hio designee. 

(a) The Division shall administer a program of grants to 
area programs for early intervention services for children 
and their families, in accordance with Part H of the Individ- 
uals with Disabilities Education Act (IDEA). 

(b) Funds may be used for any periodic or day/night 
service that is identified as needed in the Individualized 
Family Service Plan (fFSP) within the following guidelines: 



m 



children served shall be those with developmen- 
tal delays, atypical desfelopment or those at risk 
for these conditions as defined in JO NCAC 14K 
.0103. 



(21 with the federal early intervention funds, chil- 
dren served shall be from birth through two 
years of age and their families. 

(3) with state early intervention funds, children 
served shall be from birth through two years of 
age except that: 

(A) services may continue until the start of the 
next school year for children who turn three 
during the course of the school year, and 

(B) three and four year olds may be served during 
the summer and during the school year in 
before/after school programs. 

(4) funds shall be used to supplement and increase 
services for these children and may not be used 
to supplant other federal, other state or local 
funds. 

Statutory Authority G.S. 122C-1 12(a)(6); 122C-131; 
122C-150; U.S.C. 1471 Part H IDEA. 

.1115 FUNDING GROUP HOMES FOR 

DEVELOPMENTALLY DISABLED 
ADULTS 

fft) Pursuant to G.S. 122C 1 4 1, tho Division shall 



administer a program of grants to area progromo to bo 
ottllod fimdn for group hom e s for developm e ntally disabl e d 
ttdulto. 

(b) Suob gronta shall be uood to support group homoa for 
dovolopmontally disabled adults. 

(e) — Adults in whos e b e half funds ar e administ e r e d to 
programs shall b e^ 

ft) 1 8 year s of ago and older; and 

(3) rosidonta of North Carolina. 

(d) To bo eligibl e for funds for group homos for develop 
mentally disabled adults, — th e oommunit)' shall provide 
rosidonto with a total array of sorvioos and programs to moot 
thoir various needs and lovol s of capability and not just 
24 hour oaro. Th e s e programs shall promote a oompl e te life 
for th e s e individuals in a oommunit)' s e tting. 

(o) Funds for group homos for dovolopmontally disabled 
adults shall bo administorod to area programs as diroot 
grant s and do not r e quir e local matching. 

(f) — Programs may sp e nd funds for group hom e s for 
dovolopmontally disabled adults for the following ! 

(+) renting or loosing facilitie s ; 

(3) furniture or spooializ e d e qu i pm e nt for r e sid e nts; 

(5) transportation of r e sid e nts; 

(4) other nocosoory operating oxponsos as approved 

by tho Division; and 

(5) the purchas e , oonotruotion or alt e ration, — im- 

prov e m e nt or r e pair of a facility by th e ar e a 
program or a non profit board with division 
approval with tho exception of programs partici 
pating in f e d e ral D e partm e nt of Housing and 
Urban Dev e lopm e nt (HUD) S e ction 202 proj e ots 
which shall follow tho requirements spocifiod in 
(f)(6) of this Rulo. Tho program shall moot tho 
following r e quir e m e nts: 
fA) — Th e Group Hom e Mortgag e Poym e nt Program. 
Tho Division may participate in tho mortgage 
payment program contingent upon tho avail 
ability of State funds. 
(B) — Tbe — Group — HeiHe — PurohaB e /Construotion 
Program. 

(i) The Division may partic i pate in tho down 

paym e nt or lump sum purchase or oon 
struction of a group hom e in whol e or part 
contingent upon tho availability of State 
funds. 

(ii) Th e ar e a program or non profit board shall 

secure two prop e rty appraisals for review 
and approval by tho Div i sion prior to 
purchase. 
{i«) — If a now construction grant is r e qu e st e d, 
th e ar e a program shall submit two oon 
struction bid contracts from two building 
contractors — to tho appropriate — regional 
office for review and approval prior to 
oonstruotion bid lotting. 
(€) — A request for init i al renovation of a newly 
acquired — facilit)' of fivo thousand dollars 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1446 



PROPOSED RULES 



($5,000) or loan ohnll bo aubmittod to the 
appropriato regional offioo of th e DiviDion for 
approval. — Initial minor r e pairs to faoilitioo of 
loaa than one thousand dollars ($1,000) shall 
bo approved by the area program. 
{©) — A requ e st for alt e ration or improv e m e nt of an 
e xisting facility in oxoooo of fiv e thousand 
dollars ($5,000) ahall bo fors ^ 'ardod to the 
Division Director's office through tho appro 
priat e regional offio e of th e Division for ap 
proval. 
(E) — Each request as outlined in Parts (0(5)(B), (C) 
and (D) of this Rule s hall bo aooompaniod by 
a narrativ e — that e xplains the neod — for th e 
purchas e , oonotruotion or alt e ration, improv e 
mont or repair of tho facility and a copy of the 

schematic — drawings and specifications. tf 

approved by the Division of Mental H e alth, 
Developm e ntal — Disabiliti e s — and — Subotxmo e 
Abuse Services, these drawings and specifica 
tions shall be forwarded to tho Division of 
Facility Sop i 'iooo for rev i ew and approval. 

(¥) If th e group home is operat e d by a non profit 

board, tho area program shall sign a contract 
with the private non profit agency for either 
th e mortgag e paym e nta to be made or th e 
purchas e or construction program as indicat e d 
in (A) and (B) of (0(5) of this Ru l e. A copy 
of tho appropriate contract shall be obtained 
from th e controller's offio e of th e c e ntral 
offio e of the Division. 
fG^ — If a facility' owned by an area program or its 
private non profit contract agency was pur 
chased, — alt e r e d, — improv e d, — or r e habilitat e d 
using division funds and later c e as e s to b e us e d 
in tho deliver)' of services to clients, the facil 
ity may be sold at tho current fair market 
value or r e tained, and th e ar e a program or its 
privat e non profit contract ag e ncy shall r e im 
burse tho Division according to tho following 
roquiromonts: 

(i) Th e curr e nt fair mark e t valu e , acc e ptabl e 

to th e Division, ohall bo determined by 
two indopondont appraisals submitted and 
used as guidance. 

(ii) R e imburs e m e nt shall b e a pro rata shar e of 

th e accepted value, based on th e oontribu 
tion made by the Division in tho purchas e , 
construction or alteration, improvement or 
r e pair of th e facil i ty. 
(iij) — Th e ar e a program shall maintain a r e oord 
which roflocts tho amount of contribution 
made by tho State for purchase, construe 
tion or alt e ration, improv e m e nt or repair 
to th e fac i lity; 

(6) to participate in a federal Department of Hous 

ing and Urban Development (HUD) Section 202 



project (12 U.S. C. § 1701q) for tho purohoso, 

oonotruotion or alteration, improv e ment or repair 

of a group hom e with division approval. The 

program shall moot tho following roquiromonts'. 

(A) — The area program may foquoat funds fof this 

proj e ct from th e Division. Th e Division may 

participat e in the HUD Sootion 202 projoot 

contingent upon the availability of State funds. 

(B) — Tho area program shall sign a contract with a 

private non profit agency to op e oify that if the 

group home oeaooo to bo used in th e delivery 

of services to tho clients, the facility may bo 

sold at tho current fair market value or re 

tain e d, and th e privat e non profit ag e ncy shall 

r e imburs e th e Division according to th e fol 

lowing requirements! 

(i) Tho current fair market valuo, acceptable 

to th e Division, shall b e d e t e rmin e d by 
two ind e p e nd e nt appraisals submitt e d and 
used 08 guidance. 

(h) Reimbursement shall bo a pro rata shore of 

th e accepted valu e , boo e d on th e oontribu 

tion made by tho Division in th e purchase, 

construction or alteration, improvomont or 

repair of the facility. 

(€) — The ar e a program shall maintain o record 

which r e fl e otfl th e amount of contribution mode 

by the State for purchase, — construction or 

altomtion, improvomont or repair to tho group 

(g) Fund Balanc e . 

(1) Tho Division may allow group homo s for dovol 

opmontally disoblod odults to maintain a fund 
balanc e of no mor e than 15 percent of tho 
curr e nt annual budget for th e group hom e . 

(2) Tho 15 percent fiind balance aholl be genorotod 

entirely by non State fund s . 

^) Th e Division may decr e ase State oppropriation 

to group hom e , th e r e by n e c e ssitating th e group 
homo to utilize its fund bolonco, if tho State 
appropriation is required in order to continue 
op e rations at anoth e r hom e . 

f4) Th e 15 percent fiind balanc e allow e d shall b e in 

addition to the amount tho Division would oUow 
to remain in the fund bolonoo due to restricted 
donations. 

(5) Except for th e r e strict e d donations and th e 15 

percent fund bolonco, fimds for group homos for 
dovelopmontally d i sabled adults shall be ex 
p e nd e d loot. 

(6^ An allowanc e for a fund balanc e for group 

homofl that ore opwratod by an area program is 

made in Rule .1125 of this Section. 

(h) To apply for funds for group hom e s for d e velopmon 

tally disabl e d adulto^ on annual plan and budget for such 

fund s s hall bo included in the appropriate oroa program's 

total onnuol plon and budget package when it is submitted to 



1447 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



tho appropriate regional offioo of tho Divioion. 

(i) Fundo for group homoo for d e v e lopm e ntally dioablod 
adulto shall bo allooatod among tho rogiomi of tho Divioion 
by tho Division Diroctor. 

(j) Boood on tho approved annual plan and budget roquoot 
submitt e d and availability' of fundo, allooation of fundo for 
group homoo for dovolopmontally dioabl e d adulto to ar e a 
progmma within oach region shall bo mado by tho Divioion 
Diroctor of his deaignoo. 

(Ic) Tho monthly rent for oUonto reoiding in HUD fiiiano e d 
group hom e o io dotormin & d aooording to th e orit e ria oot forth 
in HUD Handbook ISSO.S, "Oocuponoy Roquiromonto of 
Subsidized Multi Famil>' Housing Programs" (which may bo 
obtained from tho Doportmont of Houoing and Urban 
Dovolopmont, 2306 Woot Moadowview Road, Groonoboro, 
H-. — G-. — 2 4 701) and horoby inoorporatod by roforonoo, 
including any subsoquont omondmonts and editions. — Should 
tho rent for thooo rooid e nto oxoood one hundr e d and fifty 
doUaro ($150) p e r month, a room and board rote higher than 
tho ootablisbod maximum rate, in aocordanoo with tho 
provisions of 10 NCAC 4 7A .0201, shall bo ohargod. The 
full r e nt shall b e payabl e to tho project own e r of tho hom e . 
RocponoibilitioD and formula for paym e nt of thio amount -afa 
as follows! 

(i^ The area program or private non profit agency 

operating th e homo ohoU pay out of ito operating 
budgot, th e first one hundr e d and fift)' doUoro 
($150) of the HUD determined rent and 20% of 
any amount that oxcooda the one hundred and 
fifty doUaro ($150). 

(2) Th e remaining 8 0% of tho amount that e xc ee ds 

tho ono hundred and fifty dollars ($150) shall be 
paid by tho rooidont or any othor party who 
aooumoo rooponoibility. 

Statutory Authority G.S. 122C-1 12(a)(6), (11); 122C-141; 
122C-147. 

.1116 FUISTDS FOR MENTAL RETARDATION 
COMPLEXES 

(a) — Identification. Pursuant to G.S. 122C 112 the 

Divioion ohall adminiotor a program of granto to K e ndall 
C e nter in Greensboro and M e ckl e nburg C e nt e r for Human 
Development in Charlotte to bo called funds for mental 
retardation complexes. 

(b) Uo e of Fundo. — Such grants ohall b e uo e d to provid e 
day car e , r e oid e ntiol cor e , and oth e r s e rvic e s to m e ntJilly 
retarded children and adults. 

(©3 — The matching requirements of funds for mentid 
retardation oompl e x e s and th e typw of e xp e nditur e s e ligibl e 
to b e support e d by funds for m e ntal r e tardation oompl e x e o 
aro tho same as those for area matching funds sot forth in 
Rule . 1 103(b) and (c) of this Section. 

Statutory Authority G.S. 122C-51; 122C-112; 143B-10. 

.1117 GRANT-IN-AID FOR ADULT 



DEVELOPMENTAL ACTIVrrY 
PROGRAMS 

(tt) Th e Divioion shall administer a program of grants to 
area pwogmms to be called tho grant in aid for adult devol 
opmontol activity progrom sr 

(b) — Such grant in aid fundo ohall bo uood to oupport 
cli e nts who ar e : 

(i) substantially — mentally — retarded — er — severely 

phyoioally dioablod persons as doFmed in 10 
NCAC HK .0103 e xc e pt that clients with a 
primary diagnosis — of othor than oubotantial 
mental retardation of sovoro phyoioal dioabilit)' 
may bo eligible fof funding provided! 
fA) — th e y hav e be e n in an i\DAP continuously from 
tt dat e prior to January 1, 1975 and ore our 
rently receiving j\DAP grant in aid; and 
(B) — dint all othor ADAP standtirds and regulations 
Buoh ao annual re evaluation and r e f e rral to the 
Divioion of Vocational Rehabilitation S e rvic e s 
shall apply equally to this client population; or 

(3) othorv . 'i6e substantially dovolopmontally disabled 

which m e ans those individuals functioning at 
e ith e r L e v e l I or L e v e l 11 as defin e d in "Pion ee r 
Funding System Qpomtions Manual, Volume HI, 
Level of EUgibilit)', Section 4 , Child and Adult 
D e v e lopm e ntal Disability", adopted pursuant to 
G.S. 150B l'l(c); 

(3^ 16 years of ago and older; 

(4) residents of North Carolina; and 

(S) e ligibl e for ADAP grant in aid regordleoo of 

financial r e souroeo with th e e xc e ption of a cli e nt 
whose work earnings exceed one half tho federal 
statutory' minimum wage ovo f a consecutive 
90 day p e riod. — With prior approval of th e 
appropriat e area director or d e sign ee , oli e nto 
who are participating in a gupportod employment 
program authorized by tho Division may hav e 
e arnings in e xcess of on e half th e minim am 
wage. — Eligibility' for olionto in non support e d 
employment settings whoso earnings have ox 
ceedod over one half tho minimum wage for 
ovor 90 oonoooutivo days may b e e xtended for 
up to on e cal e ndar y e ar if support e d e mploym e nt 
options aro not available locally and the client ia 
ineUgible for other sor>'ice8 from the Division of 
Vocational R e habilitation, — or if th e client's 
social, behavioral or vocational skill d e ficits 
preclude participation in supported employment 
options and results in ineligibility for othor 
vocational r e habilitation D e r < 'io e o. The e ligibility' 
e xtension shall occur through the existing cli e nt 
rocortification process carried out by tho dosig 
natod area program qualified dc i 'elopmontal 
dioabllitioo profoooionol (QDDP) as rofer e nood in 
10 NCAC 18M .0 8 00. R e qu e sts for th e e xt e n 
s ion shall be baaed on a joint case review in 
volving a roprosontativo of tho involved j\Di\P, 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1448 



PROPOSED RULES 



tho local VR unit and the aroo program. — The 

roquo o t ohall id e ntif^' th e opooiFio skill d e fioito 

prooluding e ligibilit>' for support e d omploymont 

or other vocational rehabilitation DCP t 'iooa and 

include plana for thooo deficito. — Tho oortiFication 

oKtonoion may b e r e applied for a maximum of 

two tim e o. — Th e sam e orit e ria and proo e dureo 

shall bo followed in each inatonco of roapplica 

tion as arc required for the initial extension. 

(o) Grant in aid for adult dovolopmontal activity programs 

shall b e adminiotcrod to area programo up to a otandard rate 

per month, as approved by the General — Assembly or 

Division Director, or both, except programs may receive 

federal grant in aid funds on a total oost baoio with th e 

Division Dir e ctor' s approval in aooordano e with S e ction 26 

of tho "Area Program Budgeting and Procedures Manual" 

(division publicat i on APSM 75 1) as published June 27, 

198 ' 1. which is adopted by r e ferenc e . — Copi e s of Section 36 

of th e "Area Program Budg e ting and Proc e dur e s Manual" 

may bo insf>octed at the Raleigh office of tho Division or 

copies may bo obtained from the Publications Office of the 

Division at a charge which cov e rs printing and postag e . 

(d) Funding of now adult d e v e lopmental aotivit)' programs 
shall bo limited to the areas (count)' or community or both) 
specified in division publication j\fSR 120 1, "Development 
of N e w — Adult — Deve l opm e ntal — Activity — Programs. " — as 
publish e d July 1, 19 8 1. which is adopt e d by r e f e r e nc e . 
Copies of this publication may bo inspected or obtained as 
specified in (c) of this Rul e . 

(o) To apply for ADj'VP grant in aid funds on onntial plan 
and budget for such fundi) shall b e includ e d in the appropri 
ate area program's total annual plan and budget package 
when it is submitted to the appropriat e regional office of tho 
Division. 

(f) Approval of releas e of ADAP grant in aid funds shall 
bo made by the Division Director or his designee. — Theso 
adoptions by — reference — afe — in accordance — with — G.S. 
150B M(c). 



Statutory Authority G. S. 
122C-141. 



122C-1 12(a)(6); 122C-131; 



.1118 SPECIALIZED COMMUNITY- 
RESIDENTIAL CARE SUBSIDY 

(q) Th o Division s hall administer a program of grants to 
area programs to b e call e d sp e cializ e d community' resid e ntial 
care. 

(b) These funda shall be tised to provide for the purchase 
of residential services for moderately, s e verely, and pro 
foundly r e tard e d cli e nts in sp e cializ e d oommunity residential 
programfl. 

(c) Sp>ocialized community residential core subsidy shall 
be administered to area programs up to a stxindard rate per 
month 06 approv e d by th e G e n e ral Ass e mbly. Division 
Director or both. 

{4) — Clients in whose boholf funds ore administered to 
programs shall bo: 



(4^ moderately, sovoroly, or profoundly retarded 

including infants at high risk for mental rotarda 
tion, for whom a diagnootio label of mental 
retardation is inappropriate prior to three years 
of ogo, OS cortified by a lioonsod phyoioian, and 
for whom a less restrictiv e program io not 
available; 

(3) botwoon tho ages of birth and 21; and 

{¥) residents of North Carolina, except for clients 

rec e iving resid e ntial oare subsidy who ar e other 
wise eligibl e and whoso resid e ncy status ohongoo 
to non state residency after admission. — Clients 
with such a change in residency status may bo 
includ e d for funding for up to on e y e ar provided 
a plan for transf e r of tho oliont to tho now 
re s idency s ite or for oltomativo funding is estab 
lished and pursued and this plan is approved and 
reviewed qtmrterly by the R e gional Director and 
area director or th e ir respectiv e dosigneoo. 
CUonts not mooting the provisions of (d)(1) and (2) of this 
Rule may receive funding upon s pecial approval of tho 
Division Dir e ctor. 

{p) — To apply for sp>ecializod oommunit)' resid e ntial ooro 
subsidy funds, on annual plan and budget for such funds 
shall be included in the appropriate area program's total 
annml plan and budget package wh e n it is submitt e d to tho 
appropriat e r e gional offic e of th e Division. 

ff) — Disbursement of specialized community residential 
caro subsidy funds shall bo mado aftor approval of tho plan 
and budg e t by th e R e gional Dir e ctor. 

Statutory Authority G.S. 122C-1 12(a)(6); 122C-131; 
122C-141. 

.1119 MENTAL RETARDATION 

COMMUNITY SERVICE FUNDS 

{er) Pursuant to G.S. 122C 112. the Division shall 

administ e r a program of grants to b e call e d m e ntal rotarda 
tion community s e rvice funds. — Th e s e funds shall bo 
allocated to tho eastern region in the amount of at least five 
hundred thousand dollars ($500,000) and to other regions 
bas e d upon th e availability of funds. 

(b) — M e ntal r e tardation community s e rvic e funds may bo 
used to support mental retardation sorvicos including, but 
not limited to, dovolopmontxil day caro for children and 
activity programs for adults. 

(0) M e ntal r e tardation oommunity s e rvic e funds shall bo 
administered to area programs as direct grants requiring no 
local matching. 

(d^ — To app l y for mental retardation oommunity son i 'ioo 
funds, an annual plan and budg e t for such funds shall b e 
included in the appropriate area program's total annual plan 
and budget package when it is s ubmitted to the appropriate 
r e gional offic e of th e Division. 

fe) — Mental r e tardation community s e p - 'io e funds may bo 
utilized for repairs and maintenance of facilities which 
roprosont normal upkeep and do not materially increase tho 



1449 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



value of tho facilitj' or oxtond its useful life. 

(f) Fundo appropriatod for montal rotordntion oommuB ky 
son'io e shall bo allooat e d to aroa progromo of tho gppropri 
ato region by tho Diviaion Director or hio designee. 

Statutory Authority G.S. 122C-112; 122C-147; 122C-151. 

.1120 COMMUNITY DEMONSTRATION 
PROJECT FUNDS 

(ft^ Purouant to G.S. 122C 112, tho Divioion ohall 

adminiotor a program of grants to bo oall e d oommua tty- 
demonstration project funds. 

(fe) — Such fiinds shall be used for tho development and 
domonotration of now and innovativ e oommunit)' oorvioes 
for m e ntally retarded poroono. 

(e) — Community demonstration projects funds shall bo 
adminiotorod to aroa programs as direct grants requiring no 
local matohing r 

(d) To apply for oommunit>' d e monstration proj e ct fundo, 
an annual plan and budget for such funds shall bo included 
in tho appropriate area program's total annual plan and 
budget fKiokag e whan it io submitted to th e regional offic e of 
tho Division. 

(e) — Community demonstration project funds shall bo 
allocated among the regions of tho Division by the Division 
Director or his doaignoe. 

ff) — Community demonstration project fundo may b e 
utilized for repairs and maintenance of facilitioe which 
roprosent normal upkeep and do not materially incrooso tho 
value of th e facility or e xtend its uo e ful lif e . 

(g) — Based on th e annual plan and budget submitt e d and 
availabilit>' of fundo, allocation of community domonotration 
project funds to area programs shall bo made by tho Divi 
sion Dir e ctor or hio d e oign ee . 

Statutory Authority G.S. 122C-112; 122C-147; 122C-150; 
143B-10. 

.1121 SOCIAL SERVICE (TITLE XX) 
BLOCK GRANT FUNDS 

(a) — Tho Divioion shall administer a program of s orviooa 
and training from fundo provided by th e Unit e d Stat e s 
D e partm e nt of Health and Human S e rvio e o und e r th e 
authority' of Title XX of tfto Social Socurity Act, 4 2 U.S.C. 
1397 13 9 7f. 

(fe) — Servic e fundo ohall b e us e d to provid e allowabl e 
o e rvio e o to moot opeoifio noodo of individuals who ar e 
emotionally disturbed, — mentally retarded, — or substance 
abusers and who have been certifiod eligible by tho appro 
priat e ar e a program. — Training funds ohall b e uo e d to 
provid e training aotiviti e o r e lat e d to th e provioion of Titl e 
XX fundable ser>'icoo. 

(e) — Programs shall bo operated by the Divioion, an aroa 
program or through contractual arrangement with an ar e a 
program. 

fd) — Allocation of fundo to area programs shall bo on an 
annual basis and shall bo based on the needs of eligible 



clients as documented in tho aroa program' s approved 
annual plan of work and budg e t r e qu e ot. 

(e) — Divioion staff shall provid e administrativ e support 
necessary for progmm development and technical asoistaneo 
to insure compliance — with federal — and state laws and 
r e gulation s . 

(f) — Reimburoement shall b e mad e in aooordanoo with 
Sections 5 and 26 of tho "Area Program Budgeting and 
Procedures Manual" (division publication APSM 75 1), 
adopt e d pursuant to G.S. 150B 11(0). 

(g) Aroa progromc oball oond roimburo e mont formii to th e 
controller' s office of the Division by tho 10th day of tho 
month following sop . 'ico. 

Statutory Authority G.S. 122C-147; 122C-150; 42 U.S.C. 
Section 1397-1397/. 

.1123 AREA MENTAL HEALTH CENTER 
CONSTRUCTION PROJECT 

(e) — The Division ohall administer a program of direct 
grants from state funds to area programs for tho construe 
tion of oompreh e noiv e ar e a programo or compon e nts of ouch 
programs which ohall be known ac oompr e h e noiv e ar e a 
programs construction project grants. — Before such grants 
can be awarded a certificate of need shall be obtained by tho 
grant ee , 
(b) Such grants may be used for the following: 

(4^ Architect's fees for the preparation of drawings 

and sp>ocifioation8 for tho project; 

(2) F ee s for preparation of contour maps and ooil 

inv e otigation; 

(3) Coots of advertioement for construction bids; 

f4) Construction contracts including general, plumb 

ing, e l e otrioal, e l e vator, air conditioning and 
v e ntilating and any oub contract or ooporat e 
contract relative to tho construction; 

(5) Items of movable equipment when approved by 

th e Divioion; 

(6) Cooto of advertisement for bido for movabl e 

equipment; 

(^?) Tho coot of ohongo orders relating to conotruc 

tion or e quipment when such chang e ord e rs ar e 
approv e d by th e Divioion of Faoilit)' S e P i 'io e o of 
tho Department of Human Resource s and tho 
Division of Mentxil Health, Montal Retardation 
and Subotano e Abus e S e rvic e s. 

(8) Th e cost of landooaping including related arohi 

tocturol service, seeding, sprigging or sodding of 
the site and the planting of trees and shrubs as 
would b e normally consid e r e d a part of tho 

g e n e ral construction contract. Tho cost of 

landscaping recreational areas such as courts and 
outdoor patient areas for therapeutic effects of 
th e e nvironm e nt in th e mental h e alth c e nt e r may 
b e paid from division fundo upon prior approval 
from tho Divis i on of Montal Health, Montal 
Retardation and Substance Abuse Sor>'ioo3 and 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1450 



PROPOSED RULES 



the Divioion of Facility Sorvicoo. — In ordor to 

obtain approval, — th o grant ee must Bubmit a 

writton proposal fully justil^'ing th e full)' juotif)' 

i ng tho thorapoutio effort of tho landscaping. 
(e) — Such grants flhall not bo uood for tho following; 

fj^ purohao e of sit e ; 

f2) attornoy — fooo for title ooaroh, — pr e parat i on of 

doodfl and other such closing costs; 
{¥) surveyor's foo for survey of lot for purposes of 

deed preparation; 
{4) oonotruotion or e quipm e nt not approved by th e 

Division; 
(5-) landscaping in excess of that included in tho 

general contract or that which is inconsist e nt 

with otipulationc r e garding landaoaping contain e d 

within this Rule; and 
(6^ stationer^', printing, s ecretarial services, pwstago, 

trave l , and oth e r incid e ntals in conn e otion with 

the proj e ct. 
fd^ — Application for such finds shall bo upon a standard 
form which s hall require the following information: 

f4^ name of applicant; 

(3) addreoD of applicant; 

(3) the name and typo of the proposed facility and 

its proposed address; 
(4) th e typ e of construction wheth e r n e w, on e xpan 

sion of e xisting facility, r e mod e ling or oth e r; 
{&j tho type of ownership of the project, whether 

public or private non profit; 
(6^ the typ e of op e rational control of th e proj e ct. 

wheth e r public or privat e non profit; 
f?3 the name, address and telephone number of tho 

applicant's representative; 
f8) the nam e , addr e ss, and telephon e numb e r of th e 

project archit e ct; 

^ a statement of the need for tho facility; 

(4#) data on the occupancy of the proposed facility; 

(44^ d e scription of programs to b e conduct e d in th e 

facil i ty; 
<4-3^ information on tho financial resources available 

to the facility; 

fl-59 th e total d e v e lopm e nt cost; 

f44) information on whether titl e to the sit e will be 

vested in tho applicant, tho agency to operate the 

facility, or othorv i 'isc; 
4+5) wh e th e r th e applicant has titl e in f ee simpl e or a 

l e as e hold, or oth e rwis e , and if th e applicant has 

only a leasehold, information on tho nature of 

th e leas e ; 
(4^) a copy of th e abstract of titl e pr e par e d by on 

attorney; 
f4?) a copy of the site sur^'oy, soil investigat i on 

reports and land appraisals, whore applicable; 
fl-8) wh e r e applicabl e , a c e rt i fication from an archi 

t e ot of th e feasibility — of improving e xisting 

structures; 
{W) a copy of the plot plan; 



(30) target dates for completion of Bohomatio, prelim 

inar>'. and final drawings; and 

(34) an e stimated construction budg e t. 

fe) — Such standard form application shall also require 
assurances of tho following: 

(+) that th e applicant posseoooo l e gal authority' to 

apply for and r e c e iv e tho grant or loan, and to 
finance and construct the proposed facility; that 
Q rosolution, motion or similar action has boon 
duly adopt e d or pass e d oo an official act of tho 
applicant's gov e rning board, authorialng tho 
filing of tho application, including all under 
standing and assuroncoa contained therein, and 
directing and authorizing th e p e rson identified as 
th e official r e pr e s e ntativ e of the applicant to act 
in connection with tho application and to provide 
such additional informat i on as may bo required; 

(3) that suffici e nt fiindo will b e available to moot tho 

non state share of th e costs of constructing the 
facility, and that sufficient funds will be avail 
able when construction is completed to assure 
e ffective — op e rat i on — and — maintonanoo — of tho 
faoilit)' for the purpos e s for which constructed; 

(5) that approval by the Div i sion of the final work 

ing drawings and Bpocifioat i ona will be obtmned 
b e for e the project is adv e rtis e d or othorv ^ 'iso 
plac e d on the mark e t for bidding; that it will 
construct tho project, or oauoo it to bo con 
structod, to final completion in accordance with 
th e application — and approv e d — drawings and 
sp e oifioationo; that it will submit to th e Soorotar)' 
of Human Resources or his designee for prior 
approval changes that materially alter tho scope 
or costs of tho proj e ct, us e of spac e or funo 
tionol layout; that it will not enter into a oon 
s truction contract or contracts for the project or 
a part thereof until tho conditions of the con 
struction grant or local program have boon mot; 

{A) that e xc e pt as oth e rwis e provid e d by state or 

local law. all contracting for construction (in 
eluding the purchase and installation of built in 
e quipm e nt) shall b e on a lump sum fix e d pric e 
basis, and oontraota will be awarded on the baois 
of competitive bidding with award of tho con 
tract to tho lowest responsive and responsible 
bidd e r — (Th e provision for e xc e ptions baa e d on 
stat e and local law will not bo invok e d to giv e 
local — contractors — et — suppliers — a — pwrcentago 
preference over rKxi local oontrootors bidding for 
th e sam e contract. — Such praotio e o ar e precluded 
by this assuranc e .); 

(5) that it will provide and maintain competent and 

adequate architectural engineering aupor i 'ision 
and insp e ction at th e construction sit e to insur e 
that th e complet e d work conforms with tho 
approved drawings and 3p)ocifications; that it will 
furnish progress reports and such other informa 



1451 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



) 



tiop 00 tho Socrotary of Human Roeourcoo or hio 
dooignoo may roquir e ; 

(6) that an oBoumnoo of oompliono e with Title VI of 

tho Civil Righte Aot of 196 4 applying to the 
facilit)' doacribod in this application was filed or 
is attaohod to tho applioation; 

^ that it will maintain grant or loan aooounting 

rocordo (idontifiablo by grant or loon number), 
including all records relating to tho receipt and 
oxpondituro of otat e grant or loan fundo and to 
tho expenditur e of th e non state shore of th e ooot 
of project for throo years after the completion 
of tho project if an audit io conducted by or on 
behalf of th e D e partm e nt of Human Rooouro e o 
within thot period, or in th e cos e wh e r e no oudit 
is performed for five yoars; oxoopt that should 
audit questiona arise with rospoct to tho grant or 
loon, th e — rooordo will be mointain e d until all 
ouoh quootiono ore rooolvod (Roprooontativ e a of 
tho stoto govommont aholl hove occoos to oil 
roasonablo times to tho grantee's records ond to 
work whonovor it io in preparation or progrooo, 
and tho oontrootor shall provid e proper fooiliti e o 
for such occoss and inspKx i tion.); 

{%) that the facility' will bo operated and maintained 

in aooordono e with th e roquiromento of opplioa 
bio otate and local ag e noioo for tho maint e nono e 
and operation of such facilitioo! 

(9) that tho applicant will roquire tho facility to bo 

dooignod to comply with the "lUuotrat e d Hand 
book to th e Handicapp e d S e ction" adopted by 
tho North Carolina Doportmont of Insurance in 
197 4 and available from tho Engineering and 
Building Codes Divioion of the Departm e nt of 
Insuranc e , P.O. Box 263 8 7, Raloigh, North 
Carolina 27611 at o nominal cost. — (The oppli 
cant shall be responsible for conducting inspoc 
tions to insur e oompl i onoe with th e s e sp e oifioa 
t i ono by th e oontrootor.); 

(4^ that the applicant will cause work on the project 

to bo oommoncod within a roasonablo time after 
rec e ipt of notification from th e Deportm e nt of 
Human R e oouro e e that fundo have boon ov ^ 'ordod, 
ond thot tho projoct will bo prosecuted to com 
plotion with roaoonoblo diligonoo; and 

^44) that any stat e funds r e c e iv e d pursuant to a grant 

or loon will b e us e d solely for d e froying th e 
dovolopmont cost of the proposed projoct. 
ff^ — Such standard form application shall also require 
asourono e s of th e following: 

fi^ That th e building will conform to all applicabl e 

roquiromonts of tho appropriate state plan and 
tho regulations pertaining thoroto; 

(3) That all portions and oen i 'ioes of th e e ntir e 

facility for th e construction of which, or in 
connection with which, aid is sought, will bo 
mode available without discrimination on oc 



count of oieod, and no professionally qualified 
p e rson will b e diooriminot e d against on oooount 
of orood with r e sp e ct to th e privil e g e of profeo 
sionol practice in tho facility; 

(J) That tho fooilit)' will furnish on area sors'ico ond 

e ither will fiimish b e low ooot or without ohorgo 
a reasonable volum e of sor i 'iooo — to p e rsons 
unable to pay for such oor^'ioos, or will supply 
on attached juotifiootion for not furnishing below 
cost or without charge a roasonablo volum e of 
s e rvic e s to p e rsons unabl e to pay th e r e for; 

(4) The facility will bo usod for tho purposes for 

\ » 'hioh it is oonotmotod for not logs than 20 years 
aft e r th e compl e tion of th e construction; ond 

(5) That th e c e rvic e s to b e provid e d by th e fooility, 

alone or in conjunction with othof facilitioo 
owned or oporotod by tho applicant, will bo 
mad e ovoiloblo for o progrom providing prinoi 
pally for persons r e siding in a particular ar e a or 
aroos in or noor which such focility is to bo 
situated, ot least tho o s sont i ol olomonts of com 
pr e h e noiv e montal health oorviooo — ii e ., oontinu 
ous s e p i 'ic e o, p e riodic s e rvio es , doy/night s e r 
vices (including at least day core son . 'ices), 
emergency sor i 'icos provided 2 4 hours per day, 
ond consultation and e ducation s e rvic e s ovoilobl e 
to area ogonoieo and prof e osionol p e rsonn e l, 
(g) After award of o grant fiscol records shall bo consoli 
dated and mointained by the treasurer of the projoct in o 
central location acc e ssible to auditors and insp e ctors of th e 
D e partm e nt of Human Rooourooo. 

(h) — Aftor oword of a gront tho nomo and addre s s of tho 
treoflurer of tho projoct shall bo oubmittod to tho Division as 
soon as o tr e oour e r is appointed. 

(i) Aft e r award of a gront r e cords shoU bo dosignod and 
mointflinod to reflect the purpose for which each oxpondituro 
is mode. 

^ — Aft e r award of a grant r e cords of th e opplicont oholl 
r e fl e ct oil transactions b e tw ee n th e sponsor and contractors 
and vondora and botwoon tho sponsor and tho Divioion. 

(k) After oward of o grant on aooounting system shall bo 
organiz e d so oo to fooilitot e auditing and pr e paration of 
r e ports. 

(i) — Aftor aword of a grant tho sponsor shall maintain a 
record of deposits and disburoomonto on o standard form 
supplied by tho Divioion. 

(m) Aft e r award of o grant o sp e cial bank account shall 
be established and maintained for tho uso of tho projoct 
exclusively into which the local share of costs shoU bo 
deposited. — Stat e and f e d e ral funds, if any, shall also b e 
deposited into tho account as th e y or e r e c e iv e d. — Ch e cks for 
all items of projoct costs shall bo drown on this account and 
a copy of the cancolod chocks and tho invoices for which tho 
ch e cks w e r e drown shall b e fil e d in ohronologioal ord e r. 

(n) After award of o grant, payment inopootiono shall bo 
mado by tho Division of facility s ervices of tho Dcpartmont 
of Human Resources when approximately 10 pvorcent, 25 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1452 



PROPOSED RULES 



poroont. 50 f>orcont. 75 porcont and Q5 f > orcont of tho 
oonotruotion and oquipmont aoquioition and inotallation io 

compl e t e . Grant fundo ohall be dioburood after ouoh 

inajxictiona l ajoh that tho total amount of funds disbursed to 
tho project will bo that poroontago of tho total amount of 
fundo granted to tho project oqtal to tho peroentag e of 
oonotruotion whioh i o aotually finish e d. — Final paym e nt shall 
bo made aftor all oonatruction is comploto and all equipment 
is dohvorod and on aud i t of tho projoct records i s complotod. 

(e^ — Aftor award of a grant tho proj e ct tr e asur e r shall 
maintain rooordo whioh will rofloot th e amount of North 
Carolina sales and use tax paid by each contractor and 
sub contractor. Such tax information shall bo required to bo 
suppli e d by th e oontraotor with e ach payment requ e st. 

(a) When capital funds are specifically appropriated by 
the General Assembly, the Division shall allocate funds for 
area program capital projects. Such allocations shall be in 
accordance with the language and intent of the appropria- 
tion. Instructions for capital applications and payment of 
funds shall be issued by the division subsequent to any such 
specific appropriation. 

(h) An area program may request to use state non-UCR 
funds, Willie M. or Thomas S^ funds, or to transfer state 
operating funds outside the regular. Willie M. and Thomas 
S^ unit cost reimbursement systems for capital costs for 
itself or its non-profit contract agency, in accordance with 
G.S. 122C-147. In accordance with G.S. 122C-147. such 
requests are limited to 24-hour and day facilities, except that 
Willie M. funds may also be used for other necessary 
facilities. The following procedures shall be followed: 

(1) Approval for purchase, lump sum down payment 
or periodic payments on a real property mort- 
gage in the name of a private, non-profit corpo- 
ration, alteration, improvement or rehabilitation 
of real estate costing under five thousand dollars 
($5.000) is delegated to the area director. 

(2) Approval for purchase, lump sum down payment 
or periodic payments on a real property mort- 
gage in die name of a private, non-profit corpo- 
ration alteration, improvement or rehabilitation 
of real estate costing five thousand dollars 
($5,000) or over shall be based u pon submission 
of an application by the area program to the 
Division Director or designee. Such application 
shall be in i format prescribed by the Division 
and may include the following: 

(A) name of applicant; 

(B) address of applicant; 

(C) the name and type of proposed or existing 
facility and its location; 

(D) the purpose of request, whether new construc- 
tion, purchase of an existing structure, alter- 
ation, improvement or rehabilitation of an 
existing facility; 

(E) a statement of the need for the facility or 
alteration, improvement or rehabilitation; 

(F) description of the programs conducted or to be 



conducted in the facility; 

(G) target date for project completion; 

£H} an estimated construction budget and projected 
revenue sources; 
(I) a statement indicating whether or not addi- 
tional Division funds will be required for 
operating costs. If this question is answered 
yes, the application shall indicate the estimated 
additional operating funds required and the 
proposed funding source; and 
(J) the name and telephone number of the area 
program representative designated as contact 
for the application; and 

(K) two property appraisals completed by licensed 
property a ppraisers for costs associated with 
the purchase of an existing building, lump sum 
down payments and period payments on the 
mortgage of real property. 

(3) Funds approved for capital projects under Para- 
graph £b} of this Rule shall be paid in the fol- 
lowing manner: 

(A) Funds approved under Subparagraph (bMV) of 
this Rule shall be requested by the area pro- 
gram using regular fund request procedures as 
funds are needed. 

(B) Funds approved under Subparagraph (bM2) of 
this Rule shall be requested in the following 
manner: 

(i) if funds are to be utilized for the purchase 
of a facility, the necessary funds may be 
requested within 30 days from when they 
are needed via a written request from the 
Area Director to the Division Director or 
designee. The request shall specify the 
amount of funds needed and the projected 
closing date of the purchase, 
(ii) if funds are to be utilized for the construc- 
tion of a new facility or renovation, reha- 
bilitation or alteration of an existing facil- 
ity, funds will be disbursed based upon 
written requests from the Area Director to 
the Division Director or designee certify- 
ing project completion at the following 
intervals: 10%. 25%. 50%. 75% and 
100%. Upon receipt of such billings, the 
Division shall issue payment consistent 
with the percentage completed. 

(4) All aspects of any capital project shall be com- 
pleted in accordance with all a pplicable federal. 
State and local regulations. Such compliance 
shall include, but not be limited to, G.S. 159 
requirements. Division of Facility Services 
licensure regulations, local building ordinances, 
etc. 

(5) The area program shall maintain a perpetual 
inventory of all facilities purchased, constructed, 
altered, renovated or rehabilitation in accordance 



1453 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



m- 



) 



Current Asoeto Por Audit R e port 



Loas! — Liabilitios Por Audit Rop>ort 
Fund Balanco 



L e oo: R e o e rs' e for Enoumbrano e o 



with this Rule. This inventory shall document 
the history cost of the facility plus subsequent 
improyements and the percentage of Diyjsion 
participation in the total cost. 
(6) Should the facility cease to be used for the 
purpose of serving clients of the Djyision. or, 
more specifically for the purpose of serving 
Willie M. or Thomas S^ clients if the purchase, 
construction, rehabilitation, alteration or im- 
provement was funded from those specific 
funding sources, the Division shall be contacted 
immediately for disposition instructions. If the 
Division so directs, the facility shall be sold at 
the current fair market value in accordance with 
G.S. 153A-176 and G.S. 160A-266. After the 
sale, the Division shall be reimbursed the Rosorvo for Inventory 
Division's pro-rata share of the proceeds from 
the sale based on the percent of contribution 
made by the Division for die purchase, construc- 
tion, alteration, improvement or rehabilitation of 
the sold facility. If an area program or its 
contract provider wishes to maintain ownership 
of a facility that was constructed, purchased, 
altered, improved or rehabilitated using Division 
funds, the area program or non-profit contract 
provider may, if authorized b^ the Division, pay 
to the Division the Division's pro-rata share of 
the current fair market value of the facility as 
determined by two independent appraisals ac- 
ceptable to the Division. 



rondorod. 

To dotormino the unrootriotod fund balonoe and 

th e perc e nt that it roproeonto to th e op e rating 

budget, the Divioion oholl uoo the following 

formnt ! 



-f- 



R e s e rv e for Patiento Aooounto R e c e ivabl e 



LoflS! Allowonco for Doubtful Accounts Patient 

Accounts Receivable ( ) ( - 

Reoor^'e for Aooounto R e c e ivabl e from 
Govommontal Entiti e o (- 



Roflon i 'o for BUT Foe s 



R e o e rs' e for Drug Education School Fooo 



-e- 



R e o e r^' e for R e otriot e d Donations (— 

Fund Balance Restriction Proviouoly Approved by 
DMH/MR/SAS (Prior to February 1, 19 8 6.) (- 



Oth e r(Li6t) 



-e 



Unrestricted Fund Balance 



Annual approv e d budg e t pluo approv e d budget 
revisions as of September 30 



P e rc e nt Unr e stricted Fund Balance to Current 
i\nnual Budg e t 



p e rc e nt 



Statutory Authority G.S. 122C-112; 122C-113. 

.1125 FUND BALANCE: AREA PROGRAMS/ 
CONTRACT PROGRAMS 

(a) In order for the Division to have input into the actions 
regarding fund balances in area programs and contract 
prognuno ao provided for in Rule . 101 1 of thio Subchapter, 
the following shall tak e plac e aft e r th e c e rtifi e d public 
accountant's audit report is rendered and the tentative 
settlement report prepared; 

(4^ Th e fund balance s e t forth within th e annual 

audit of area programo and contract progra ms 
shall bo verified by the Divioion. 

(3) Since single county area progroma are consid 

e r e d a d e partm e nt of th e county for budg e tary 
and financial r e porting, separat e fund balano e o 
for the single county area programs are not 
required. — In order to assure that single county 
area programo ar e in compliance with G.S. 
122C 146 which stat e s that fe e s rec e ived for 
services shall not reduce or replace the budgeted 
commitment of local tax revenue, the Division 
shall review th e utilization of county g e n e ral 
funds and the disposition of foes receiv e d for 
aor^'ioo each year. — This review shall occur after 
the annual audit report for the county has been 



^4r) If the unrestricted fund balance is not in exces s 

of 15 p e rc e nt of th e curr e nt onnuiil budget, no 
action io to take place. 

(5) If the unrestricted fund balance is over 15 

percent of the current annual budget, the Divi 
oion oholl r e duc e ito allocation of divioion funds 
in th e y e ar oubo e qu e nt to th e y e ar in which the 
excess occurred, 
(b) The amount of reduction of financial s upport by the 
divioion to ar e a programs and contract programa ao r e f e r 
e nc e d in (a) (5) of this Rul e may bo decreas e d and/or 
delayed if thoro are extenuating circumstanoo s which, in the 
opinion of the Division Director, warrant relaxation of this 
policy. Any action tok e n in r e gard to (b) of thio Rul e shall 
b e docum e nt e d in writing. 



Statutory Authority G.S. 122C-1 12(a)(6); 
122C-146; 122C-147; 143B-10; 159-8. 



122C-144; 



. 1 126 FUNDING GROUP HOMES FOR 

MENTALLY RETARDED CHILDREN 

(«) Pursuant to G.S. — 122C 117, the Division shall 

adminiot e r a program of grants to ar e a programs to b e 
called funds for group bomoo for mentally retarded children. 

(b) Such grants shall bo used to s upport group homos for 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1454 



PROPOSED RULES 



montxilly retarded childron. 

(o) To bo oligiblo for fundo for group hom e o for m e ntally 
retard e d childr e n, th e oommunity shall provid e r e sid e ntfl 
with a total array of oorviooo and programo to moot their 
varioua ncxida and Icvolo of capability and not just 2 4 hour 
car e . — Tli e c e programe shall promot e a compl e t e lif e for 
thoQO individualo in a oommunity o e tting. 

(d) Funda for group homos for mentally rotardod childron 
shall be adminiotcrcd to area programs as direct grants and 
do not requir e local matching. 

(o) Programt) operated by an ar e a program or non profit 
programs subcontracting through the area program are 
eligible for funding of the follosving expondituroo: 

fl^ staffing for client sorviceo; 

(3^ trav e l; 



(^^ supplies; 

{4j administrative and program equipment; 

f§9 rent or l e as e of a facility; 



(4^ other program needs as approv e d by th e Divi 

sion; and 

f?3 the purchase. — construction or alteration, — \m- 

provomont or repair of a facility by th e ar e a 
program or a non profit board with division 
approval . — The program shall meet the require 
monts of the following: 
(A^ — The Group Hom e Mortgage Payment Program. 
The Division may participat e in th e mortgag e 
payment program in part or In total dependent 
upon the availability of state funds. 
(B) — Th« — Group — Hom e — Purohao e /Construotion 
Program. 

fi^ The Division may participate in the down 

payment or lump sum purchase or con 
otruotion of a group hom e in whol e or part 
conting e nt upon the availability of stat e 
funds. 

(+i) The area program or non profit board shall 

s e cur e two prop e rty appraisals for r e vi e w 
and approval by th e Division prior to 
purchase. 
(iii) — If a new construction grtmt i s requested, 
the ar e a program shall submit two con 
struotion bid oontraoto from two building 
contractors — te — the — appropriate — regional 
office for review and approval prior to 
construction bid l e tting. 
{G) — A r e qu e st for initial r e novation of a n e wly 
acquired — facility — of five — thousand — dollars 
($5,000) or less shall be submitted to the 
appropriate regional offic e of th e Division for 
approval. — Initial minor r e pairs to faciliti e s of 
less than one thousand dollars ($1,000) shall 
be approved by the area program. 
{©) — A r e qu es t for alt e ration or improv e m e nt of an 
e xi s ting facility in e xo e oo of fiv e thousand 
dollars. ($5.(XX)) shall be for . varded to the 
Division Director's office through the appro 



priato regional offioo of the Division fof ap 
proval . 
(E) — Each r e qu e ot as outlined in ( e )(7)(B) and (D) 
ef-t hio Rule shall bo aooompaniod by a narra 
tive that explains the noed for the purchase, 
oonstruotion, alteration, improv e m e nt or r e pair 
of th e facility and a oopy of the ooh e matio 
drawings and specification s . — If approved by 
the Division of Mental Health, Mental Retar 
datioD and Subotanoe Abus e S e P i 'iooo, thoo o 
drawings and sp e oifioationa shall bo forwarded 
to the Division of Facility Sor i 'icoa for review 
and approval. 
(F) — If th e group hom e is operat e d by a non profit 
board, the area program shall sign a l e gally 
binding contract with the private non profit 
agency for either the mortgage payments to bo 
mad e or th e purchas e or construction program 
00 indicated in (A) and (B) of (q)(7) of this 
Rule. A copy of the appropriate contract shall 
bo obtained from the oontroUer'a offioo of the 
c e ntral offic e of th e Divioion. 
(G) — If a facility own e d by on ar e a program or its 
private non profit contract agency was pur 
ehoQod, — altered, — improved, — or rohabilitatod 
tifling division funds and lat e r ooaooo to b e used 
in th e d e liv e r)' of s e n i 'io e o to oli e nto by tho 
area program or its private non profit oontract 
agency, tbo facUity shall bo sold at the current 
fair mark e t valu e as d e t e rmin e d by two ind e 
pondont appraisals acc e ptabl e to tho Divioion. 
TTio Division shall bo reimbursed a pro rata 
share of the proceeds of the sale baood on tho 
perc e nt of oontribution mad e by th e Division 
in th e purchao e , alt e ration, improv e m e nt or 
rehabilitation. — The area program shall main 
tain records on a continuous basis which 
r e fl e ct th e amount of contribution for pur 
ohos e , alt e ration, improv e m e nt, or r e habilita 
tion by the Division, area program or other 
funding entity. 
f^ — Fund Balanc e . 

f4-) Th e Divioion may allow group hom e o for men 

tally retarded children to maintain a fund balance 
of no more than 15 percent of the curr e nt annual 
budg e t for th e group homo. 

(S^ Th e 15 perc e nt fund balance shall bo generated 

entirely by non state fiinds. 

(5) Tho Division may decrooso state appropriation to 

a group hom e , th e r e by necessitating th e group 
hom e to utilize its fund balanc e , if th e stat e 
appropriation is required in order to continue 
operations at anothor homo. 

(4) Th e 15 p e rc e nt fund balanc e allow e d shall b e in 

addition to th e amount th e Division would allow 
to remain in the fund balance duo to restricted 
donations. 



1455 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



(5) Except for the rostrictod donationo and tho 15 

poroont fund balanoo, funds for group homoo for 
montally r e tarded ohildron ohall bo exp e nd e d 

\n nt 

(^) i\n allowance for a fund balance for group 

homeo that ar e operated by an ar e a program is 
made in Rul e .1135 of thio S e otion. 

(g) — To apply for funda for group homoo for mentally 
retarded children, an annual plan and budget for auoh funda 
shall b e includ e d in th e appropriate ar e a program'o total 
annual plan and budget package when it io oubmitted to th e 
appropriate regional office of the Division. 

(h) Fundo for group homos for montally retarded childr e n 
ohall b e allooatod among tho rogiono of tho Di^'ioion by th e 
Divioion Director. 

(i) Baood on tho approved annual plan and budget request 
submitted and availability' of fundo, allocation of funds for 
group homoo for montally retarded childr e n to ar e a pro - 
gramt) within e ach r e gion shall b e mad e by the Division 
Director or his designee. 

Statutory Authority G.S. 122C-1 12(a)(6); 122C-147. 

.1127 GROUP HOMES FOR MR/BEHAVIORALLY 
DISORDERED PERSONS 

(a) Tho Divioion ohall adminiot e r a program of granto to 
programo to b e called fundo for group homeo for mentally 
retarded and beha' i 'iorally disordered person s . 

(b) Such granto shall be used to support group homoo for 
montally retarded and b e haviorally disord e red poroono. 

(o) To b e e ligible for fundo for group hom e s for m e ntally 
retarded and behaviorally diaordored poraono, — tho area 
progmm shall provide a total army of services and programs 
to m ee t the activ e tr e atm e nt and behavioral programming 
needs of each cli e nt on a 24 hour daily baoio. — Th e s e 
programs shall attempt to increase socially acceptable 
behaviors and decrease inappropriate behaviors to the extent 
that olionto may enter a more normaliEed o e tting following 
termination from th e op e oialia e d group hom e plac e m e nt. 

(d) — Funda for group homos for montally retarded and 
boha' i 'iorally disordered persons shall bo administered to 
ar e a programs as dir e ct granto and do not r e quir e local 
matching. 

(e) — Programs may spend funds for group homes for 
montally retarded and behaviorally disordorod peraona for 
th e following: 

(4) to rent or loaoo facilities; 

(3) furniture or spociahzed equipment for residents; 

(3) transportation of rosidonta; 

(4) other neooooary operating e xp e ns e s ao approv e d 

by th e Divioion; and 

(§) the purchase, construction, alteration, improve 

ment or repair of a facility by the area program 
or a non profit board with divioion approval. 
Th e program shall m ee t th e following r e quir e 
monts! 
(A) — Tho Group Home Mortgage Payment Program. 



Tho Division may participate in the mortgage 
payment program in part or in total d e p e nd e nt 
upwn tho availability of state fundo. 
(B) — The — Group — Heeae — Purchase/Construction 
Program. 

(i) Th e Divioion may participat e in th e down 

paym e nt or lump sum purchaoe or con 
struction of a group home in whole or part 
contingent upon tho availability' of state 
fundo. 

(ii) Th e area program or non profit board shall 

secure two proport)' appraisals for review 
and approval by the Divioion prior to 
purchao e . 
(iii) — If a now construction grant io r e qu e ot e d, 
the area program s hall s ubmit tv ^ 'o con 
struction bid contraoto from tv » 'o building 
contraotoro to th e appropriate regional 
office for r e view and approval prior to 
construction bid lotting. 
(€) — A request for initial ronovation of a newly 
acquir e d — facility — of fiv e — thou i and — dollars 
($5,000) or l e oo ohall b e oubmitt e d to th e 
appropriate regional office of tho Divi s ion for 
approval. — Initial minor repairs to facilities of 
l e oo than on e thouoand dollaro ($1,000) ohall 
b e approv e d by th e ar e a program. 
(B) — A request for alteration or improvement of an 
existing facility in excess of five thousand 
dollars ($5,000) shall b e forward e d to th e 
Divioion Dir e ctor's offic e through the appro 
priato regional office of tho Division for ap 
proval. 
(^ — Each requ e st ao outlin e d in ( e )(5)(B) and (D) 
of thio Rule ohall be aooomponi e d by a narra 
tivo that explains tho need for the purchoflo, 
construction, altemtion, improvemont or repair 
of th e facility and a copy of th e ooh e matio 
drawings and op e oifioationB. — If approv e d by 
the Divi s ion of Mental Health, Mental Rotar 
dation and Subotanoo Abuoo Sor^'icos, thooo 
drawings and op e oifioationo shall b e forv ^ 'ardod 
to th e Division of Facility S e rvio e o for r e vi e w 
and approval. 
(F) — If the group home is operated by a non profit 
board, th e ar e a program ohall sign a l e gally 
binding contract with the private non profit 
agency for either the mortgage payments to bo 
made or tho purchase or construction program 
ao indicated in (A) and (B) of (e)(5) of thio 
Rul e . A copy of th e appropriat e contract shall 
bo obtained from the controller's office of tho 
central office of the Division. 
(6) — If a faoilit)' own e d by an ar e a program or its 
privat e non profit contract ag e ncy was pur 
chased, — altered, — improved, o r rc j iabilitatod 
using division funds and later coaoos to bo used 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1456 



PROPOSED RULES 



in the delivery of sop i 'icoo to olionto by the 
aroQ program or ito private non profit oontraot 
agonoy. th e facility shall be cold at th e ourr e nt 
fair market value as determined by two inde 
pendent appraiaals acceptable to the Division. 
Tho Div i oion shall b e roimburo e d a pro rata 
share of the proooedo of th e oalo bac e d on th e 
porcont of contribution made by tho Division 
in the purchase, alterat i on, improvement or 
rehabilitation. — TTie area program ohall main 
taifl — reoordo — on a continuouo baoio which 
rofloct tho amount of contribution for pur 
chase, altorntion, improvement or rohnbilitation 
by tho Divioion. area program or oth e r funding 
ontit)'. 
(f) Fund Balance. 

f4^ Tho Division may allow group homos for mon 

tally r e tard e d and b e haviorally disordorod per 
oono to maintain a fund balanc e of no more than 
15 percent of tho current annual budget for tho 
group homo. 

(3) Tho 15 percent fund balance shall bo generated 

entirely by non stat e funds. 

(3^ Tho Division may docroaso state appropriation to 

a group homo, thereby necessitating the group 
home to utiliz e its fund balanc e , — if the stat e 
appropriation is r e quired in ord e r to continu e 
op>orations at another homo. 
( 4 ) The 15 porcont fund balance allowed shall bo in 

addition to th e amotint th e Divioion v . 'ould allow 
to remain in tho fund balanc e duo to rootriotod 
donations. 

(S^ Exoopt for tho restricted donations and tho 15 

percent fund balanc e , fiindo for group hom e s for 
m e ntally r e tard e d and b e haviorally disord e r e d 
persons shall bo oxpondod last. 

(€) An allowance — for a fund balance — for group 

hom e s that ar e op e rated by an ar e a program is 
mad e in Rul e . 1125 of this S e ction. 
(g^ — To apply for funds for group homes for mentally 
natardod or behaviorally disordered persons, an annual plan 
and budg e t for ouch funds s hall b e includ e d in th e appropri 
ate area program's total annua l plan and budg e t packag e 
when it is submitted to tho appropriate regional office of tho 
Division. 

fh) — Fund s for group homeo for mentally retarded or 
behaviorally disord e red p e rsons ohall b e allocat e d among th e 
regions of the Division by the Divis i on Director. 

(i) Ba s ed on the approved annual plan and budget request 
submitt e d and availability of funds, allocation of funds for 
group hom e s for m e ntally r e tard e d or b e haviorally dioor 
dered pwrsons to area programs w i thin each region shall bo 
made by tho Divi s ion Director or his designee. 

Statutory Authority G.S. 122C-1 12(a)(6); 122C-147. 

.1128 APARTMENT LIVING FOR MENTALLY 



RETARDED ADULTS 

(a) Pursuant to G.S. 122C, th e Division ohall adminiotor 
a program of grants to programs to bo call e d apartment 
living for mentally retarded adults. 

(b) Such granta shall bo used to support apartmont living 
for m e ntally retard e d adults. 

(o) Adults in whos e b e half funds ar e administ e r e d to 
programs shall be; 

fH 1 8 yoars of ago or oldor; and 

(3) r e sid e nts of North Carolina. 

f4) — Funds for apartm e nt l i ving for mentally r e tarded 
adults shall bo administered to programs as direct grants and 
do not require l ocal matching. 

fe) — Programs may spend funds for apartm e nt living for 
m e ntally r e tard e d adults for th e following: 
(1) rental or leasing of facilitiog; 

(3) furniture or spocializod equipment for roaidepts; 

(^) transportation of rooidonto; 

f4^ op e rational e xp e ns e s to include but not bo lim 

ited to: food, utilities, housokooping supplies, 
insuranoo and bond, professional sor^'icoa; 

(5) staff salaries; 

(#) staff training; 

f?) resident dental and modical needs; 

( 8 ) repairs — and — maintenance — of facilities — which 

r e pr e s e nt normal upkeep and do not materially 
inor e oo e th e valu e of th e faoilit)' or e xt e nd ita 
useful l i fe; 

(9) to participate in a federal Department of Houa 

ing and Urban D e v e lopm e nt (HUD) Sootion 202 

proj e ct (12 U.S.C. § 17Qlq) for tho purohaco, 

construction or alteration, improvomont or repair 

of Q facilit)' with division approval. Tho program 

shall meet th e following roquir e m e nto: 

(A) — Th e ar e a program may r e qu e st funds for this 

project from the division. The Division may 

participate in tho HUD Section 202 project 

conting e nt upon th e availability of state funds. 

(B) — Th e area program shall sign a legally binding 

contract with a private non profit agonoy to 

9p>ocily' that if the facility coooos to be used in 

th e d e liv e r)' of o e P i 'io e o to tho oli e nto, th e 

privat e non profit ag e ncy shall r e imburs e th e 

Division according to tho following roquiro 

monts: 

(i) If tho facility is sold, it should bo sold at 

th e current fair mark e t valu e as d e t e rmin e d 

by tv i 'o indopendont appraisals aoooptablo 

to the Division and tho Division shall bo 

r e imburs e d a pro rata oharo of tho selling 

pric e of th e facility bao e d on tho oontribu 

tion made by tho Division in the purchaao, 

construction, or altemtion, improvomont or 

r e pair of th e facility. 

(it) If th e facility is r e tained by th e private 

non profit agency, the Divioion shall bo 
reimbursed a pro rata share of tho current 



1457 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



faif markot value of tho facility' aa dotor 
min e d — hy — twe — ind e p e nd e nt — appraioalo 
aoooptablo to th e Divioion boo e d on th e 
contribution made by tho Division in tho 
purchaBO, — construction, — er — alteration, 
improv e ment or r e pair of th e faoilit)'. 
(G) — Th e ar e a program oholl maintain a r e cord 
which roflocta tho amount of contribution made 
by tho state for purchase, construction, or 
altorotion, improvement or ropair to th e faoil 

fiO) other nocos9ar>' operating oxponsos aa approved 

by the Divioion. 

(f) To apply for fundo for apartm e nt living for m e ntally 
retarded adultc, on annual plan and budget for such funds 
shall bo included in tho appropriate program's total annual 
plan and budget package when it is submitted to tho appro 
priato regional offioo of the Division. 

(g) — Funds for apartm e nt living for mentally r e tard e d 
adults shall be allocated among the regions of tho Divi s ion 
by tho Division Director. 

(h) Baood on tho approved annual plan aad budg e t roquoot 
submitt e d and availability of funds, allocation of fundo for 
apartmont living for mentally retarded adults to programs 
within each region shall bo made by the Division Director 
or his deoigneo. 

Statutory Authority G.S. 122C-1 12(a)(6); 122C-147. 

.1129 SUBSTITUTE FAMILY CARE 

(a^ — Pursuant to G.S. 122C 113, and 122C HT, th e 
Division shall administer subsidy roimburBomonts to area 
programs to bo called substitute family care r 

(b) Suoh subsidy r e imburoomento shall be uood to provide 
for the establishm e nt of nurturing and dovelopmentally 
stimulating foster care for montally retarded children placed 
by county dopartmonto of social oor . 'iooQ. — Tho focus of 
substitute family car e programs shall e xt e nd b e yond room 
and board into tho provision of a hom e lik e e nvironm e nt that 
provides developmental training. 

(e^ — Persons in whoso behalf funds aro reimbursed shall 

(i) r e sid e nts of North Carolina; 

(3) in licensed foster homos approved by county 

departments of social services; 
(3) botv i 'eon th e ag e s of birth and 1 8 , unl e ss other 

wise approved by th e county d e partm e nt of 

social sop i 'ices. 

(d) To apply for substitute family care subsidy reimburse 
m e nt, on annual plan and budg e t for suoh fundo shall b e 
includ e d in th e appropriate area program's total annual plan 
and budget package when it is submitted to the regional 
office of tho Division. 

( e ) Substitute family oare subsidy reimburoom e nts shall b e 
allocat e d among th e r e gions of the Division by th e Division 
Director or his dosignoo. 

f^ — Based on tho annual plan and budget submitted and 



availability' of funds, allocation of substitute family oare 
subsidy r e imbursomentc to area programs shall b e approv e d 
by th e Divioion Dir e ctor or his d e oignoe. 

Statutory Authority G.S. 122C-112; 122C-147. 

.1130 RESPITE CARE 

(a) Pursuant to G.S. 122C 1 4 7, the Division shall 

administer a program of grants to area programs to bo 
call e d r e spite fundo. R e opite fundo shall b e administ e r e d as 
dir e ct grants not requiring match. — R e opite sor . 'iooo shall bo 
provided on a planned or omergoooy basis for a pwriod of up 
to thirty days, to eotablioh reopite euro aorvieoa for familioa 
of m e ntally retard e d individuals. 

(b) Programn op e rat e d by an ar e a program or non profit 
progroma subcontracting through tho area program are 
eligible for funding of the following oxpondituroa: 

{¥) s taffing for cli e nt o e rvioes; 

(3) trav e l; 

(3^ supplies; 

(4) administrative and program equipment; 

other program neodo ao approv e d by tho Divi 



(5)- 



program 

(6) rent or loaoo of facility; 

^ other neceosar)' operating expenses as approved 

by the Divioion; and 

(8) th e purohoc e , oonstruotion, alt e ration, improv e 

mont or ropwir of a facility by the area program 
or a non profit board with division approval. 
Th e program shall meet the r e quirem e nts of th e 
following: 
(A) — Tho Group Homo Mortgage Payment Program. 
Tho Division may participate in tho mortgage 
paym e nt program in part or in total dependent 
upon th e availability of stat e funds. 
(B) — The — Group — Home — Purchaao/Construction 
Program. 

(i) Th e Divioion may participate in th e down 

paym e nt or lump oum purohao e or con 
struction of a group home in whole or part 
contingent upon the availability of state 
funds. 

(«) Th e ar e a program or non profit board shall 

secure two property' appraisals to tho 
appropriate regional office for review and 
approval by th e Divioion prior to pur 
chas e . 
(tit) — If a now construction grant is requested, 
the area program shall submit tv ^ 'o con 
Btruotion bid contracts from tsvo building 
contractors — to th e appropriate — r e gional 
offioo for review and approval prior to 
construction bid lotting. 
(€) — A r e quest for initial renovation of a n e wly 
acquired — facilit)' — of fiv e — thousand — dollars 
($5,000) or loss shall be submitted to tho 
appropriate regional office of tho Division for 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1458 



PROPOSED RULES 



approval. — Initial minor ropairo to faoilitioa of 
looo than one thouoand dollaro ($1,000) ohall 
bo approv e d by th e ar e a program. 
(B) — A roquoot for altoration or improvemont of on 
existing facility in oxcoos of fivo thouaand 
dollars ($5,000) ohall bo forv ^ 'ord e d to th e 
Divioion Dir e ctor's offic e through th e appro - 
priate regional office of the Division for ap 
proval. 
(^ — Each r e quoot an outlin e d in (b)( 8 )(B) and (D) 
of thio Rule ohall b e aooompanied by a narra 
tivo that explains the nocd for tho purchoflo, 
conatruction. alteration, improvemont or repair 
of th e facility and a copy of th e ooh e matio 
drawingo and sp e cifioationo. — If approv e d by 
tho Division of Montd Health, Mental Rotar 
dation and Substance Abuse Sor^'ieos, thooo 
drawingo and DfKwifioationfl ohall b e for * 'ard e d 
to the Divioion of Faoilit)' Sorvio e e for r e vi e w 
and approval. 
{¥) — If tho group home is operated by a non profit 
board, th e area program ohall sign a legally 
binding oontraot with th e private non profit 
agency for either tho mortgage payments to b e 
made or the purchase or construction program 
ao indioatod in (A) and (B) of (b)( 8 ) of thio 
Rule. A copy of th e appropriate oontraot ohall 
bo obtained from the controllor's office of tho 
central office of the Divioion. 
(S3 — If a facility owned by an area program or its 
private non profit oontraot ag e ncy woo pur 
chased, — altered, — improved, — or rehabilitated 
using division funds and later coosos to bo used 
in tho deliv e r)' of s e r i 'iooo to oli e nto by th e 
area program or ito private non profit oontraot 
agency, tho facihty shall bo sold at tho current 
fair market value as doterminod by two indo 
p e nd e nt appraioalo acc e ptabl e to th e Division. 
TTio Divioion shall b e reimbursed a pro rata 
share of tho proceeds of tho sale bosod on the 
p>orcent of contribution made by tho Division 
in th e purchas e , alt e ration, improv e m e nt or 
rehabilitation. — Th e ar e a program shall main 
tain records — on a continuous basis which 
reflect tho amount of contribution for pur 
ohoo e , alt e ration, improv e m e nt, or rohabilita 
tion by th e Divioion, ar e a program or oth e r 
funding entity. 
(e) — Fund Balance. 

(4) TTie Division may allow group homes for rooi 

d e ntial non profit r e spit e programs to maintain 
a fund balance of no more than 15 percent of the 
current armual budget for the group home. 

(33 Th e 15 p e rc e nt fund balanc e shall b e g e n e rat e d 

e ntir e ly by non stat e funds. 

(5) Tho Division may decrease state appropriation to 

a group homo, thereby necessitating tho group 



home to utilize its fund balanoo, if tho state 
appropriation i s r e quir e d in order to oontinue 
op e rations at anoth e r hom e . 

(4) The 15 poroont fiind balance allowed shall bo in 

addition to the amount the Division would allow 
to r e main in th e fund balanoo du e to r e otriotod 
donationo. 

(5) Except for tho reotriotod donations and tho 15 

percent fund balance, funds for residential non 
profit r e spit e program shall b e e xpended loct. 

(6) An allowonoo — for a fund balanoo — for group 

homos that are operated by an area program is 
made in Rule . 1 125 of this Section. 
(d) Reopito fundc shall b e allocat e d among tho rogiono of 
th e Division by th e Division Dir e ctor or his d e sign ee . 

(o) To apply for respite funds, an annual plan and budget 
for such funds shall bo included in the appropriate area 
program's total annual plan and budg e t packag e submitted 
to tho r e gional offio e of th e Division. 

(f) Booed on the approved annual plan and budget roquoat 
submitted and availability of funds, allocation of respite 
funds to ar e a programs shall bo approved by tho Division 
Dir e ctor or his deoignoo. 

Statutory Authority G.S. 122C-1 12(a)(6); 122C-147. 

.1131 FUNDS FOR COMMUNITY ALCOHOL 
PROGRAMS IN WESTERN N.C. 

(a) In furthoranoo of G.S. 122C 112 and 122C 147, tho 
Envision shall administer a progmm for th e chronic alcohol 
ios of w e st e rn North Girolina. 

(b) Thoso special appropriated legislative funds shall bo 
used to dovolop a long term treatment program for chronic 
alcoholics of th e w e stern r e gion. Such a program is e ligibl e 
for funding of th e following e xp e ndituroo: 

(i) s taffing for client sop i 'icos; 

(3) travel; 

(3) oupplioo; 

(4) adminiotrativ e and program e quipm e nt; 

(5) other program needs aa approved by tho Divi 

sioni and 

(6) r e pairs — and nmint e nano e — of faoiliti e o — v i 'hioh 

roproGont normal upk ee p and do not materially 
incrottoo tho value of the faeility or extend ita 
usoful life. — Thoso special appropriated funds 
ohall not b e us e d for purchas e or conotruotion of 
r e al prop e rty. 

(c) Thoso special appropriated legislative funds shall bo 
administerod by the appropriate region to match federal and 
local funds of th e program for th e ohronio alooholioo. 

(d) For a program to apply for th e s e sp e cial appropriat e d 
legislative funds, an annual plan and budget for such funds 
shall bo included In the appropriate area program's total 
annual plan and budg e t package when it is submitt e d to th e 
appropriat e r e gional offio e of th e Divioion. 

(e) — Allocations shall bo made by the Director of tho 
Division or his dosignoo. 



1459 



NORTH CAROLINA REGISTER 



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10:15 



PROPOSED RULES 



Statutory Authority G.S. 122C-112; 122C-147. 

.1133 FUNDING ALCOHOL AND DRUG 
EDUCATION TRAFFIC SCHOOLS 

(a) Pursuant to G.S. 20-179.2 the Department of Human 
Resources shall have the authority to approve programs, 
budgets and contracts with public and private governmental 
and non-governmental bodies for alcohol and drug education 
traffic schools operated by an area program or operated by 
a contractor through a contract with an area program. 

(b) Fees paid by persons enrolling in an alcohol and drug 
education traffic school established pursuant to G.S. 
20-179.2 shall be used to support the schools except as 
indicated in (e) of this Rule. Other funds to support the 
schools may come from multiple sources such as, but not 
limited to, county general funds, state appropriations, 
federal appropriations, and receipts for services (patient 
fees). This Rule is established to set accounting require- 
ments for the fees received pursuant to G.S. 20-179.2. 

(c) Fees received pursuant to G.S. 20-179.2 shall be 
limited to purchases of the following: 

(1) to rent or lease space to conduct alcohol and 
drug education traffic school classes if sufficient 
space is not available In area program facilities; 

(2) personnel and support costs necessary to assure 
a systematic and timely processing of referrals to 
alcohol and drug education traffic schools; 

(3) suppUes and materials necessary for the efficient 
and timely ojjeration, evaluation and administra- 
tion of alcohol and drug education traffic schools 
and for developing and maintaining an efficient 
liaison process with the judicial system, inter- 
ested community groups, the Division of Motor 
Vehicles and the Department of Human Re- 
sources; 

(4) non-administrative equipment necessary for the 
operation of alcohol and drug education traffic 
schools; 

(5) administrative equipment for alcohol and drug 
education traffic school personnel employed 
full-time and a pro-rated amount for personnel 
assigned less than one hundred percent of the 
time to traffic schools; 

(6) renovations that do not result in the acquisition 
of real property by the area program; 

(7) travel; 

(8) area program administrative costs that can be 
documented as chargeable to the schools; and 

(9) other necessary operating expenses as approved 
by the Division. 

(d) Fees received pursuant to G.S. 20-179.2 shall not be 
used for acquisition of real property by the area program. 

(e) Fees received pursuant to G.S. 20-179.2 shall be used 
to support the operation, evaluation and administration of 
the alcohol and drug education traffic schools to the extent 
that the schools are fully accredited by the Division. Any 
excess fees received pursuant to G.S. 20-179.2 are to be 



used to continue or to expand alcohol and drug services. 

(f) Fees received pursuant to G.S. 20-179.2 shall not be 
used in any manner to match state or division funds or to be 
included in any computation for state or division formula 
funded allocations. 

(g) Fees received pursuant to G.S. 20-179.2 shall be 
consistently identified as such. All such fees remaining at 
the end of the area program's fiscal year shall retain their 
identity and the fund balance of the area program shall be 
so restricted as to assure continued use of the fees for the 
alcohol and drug education traffic schools or to continue or 
to expand other alcohol and drug abuse services. 

(h) Area programs shall maintain records which indicate 
which individuals have paid for the traffic schools. 

(i) Pursuant to G.S. 20-179.2, area programs shall 
receive fees from either the person convicted or from the 
judiciary. The individual enrolled in the school shall pay 
the fee to the area program providing the school, except that 
if the clerk of court in the county In which the person is 
convicted agrees to collect the fees, the clerk shall collect all 
fees for persons convicted in that county. The clerk shall 
pay the fees collected to the area program serving the 
catchment area in which the clerk is located regardless of 
where the defendant attends the school. 

(j) Area programs receiving fees from the judiciary for 
individuals who will be enrolled in schools operated by 
other area programs shall transfer 80 percent of the fees 
received from the judiciary for those individuals to the area 
programs enrolling the Individuals up>on receipt of an 
invoice. The 80 percent shall be transferred to the area 
program providing the school regardless of whether the 
Individual attends the school. 

(k) Area programs receiving fees directly from an 
individual who has been convicted in a county outside the 
area program's catchment area shall transfer 15 percent of 
the fees collected to the area program which serves the 
county where the individual was convicted upon receipt of 
an invoice from the area program serving the county where 
the conviction occurred. Any area program not desiring to 
collect the 15 percent from another area program is not 
required to invoice that program. A decision not to collect 
the 15 percent shall be approved by the area board and 
documented in the board minutes. An area program that 
does not desire to invoice another area program shall honor 
invoices presented to it from other area programs that desire 
to collect the 15 percent. 

(1) Five percent of all fees received by the area program 
pursuant to G.S. 20-179.2 shall be forwarded to the Depart- 
ment of Human Resources on a monthly basis. The area 
program that initially receives the fees from the persons 
paying the fees or from the judiciary system shall be 
responsible for transferring the 5 percent to the Department. 
Checks shall be made payable to and sent to: Division of 
Mental Health, Mental R e tardation Developmental Disabili- 
ties and Substance Abuse Services, Fiscal Services Section. 
Controllor'fl Offioo, Suite 1103 612 , 325 North Salisbury 
Street, Raleigh, North Carolina 27611 27603-5906 . 



10:15 



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November 1, 1995 



1460 



PROPOSED RULES 



(m) The amount of fees transferred to another area 
program or to the Division as indicated in (j) through (1) of 
this Rule shall be recorded in the accounting records to 
account number 97 TRANSFER OF DUI FEES. Under no 
circumstances shall the transfer of fees be recorded as an 
operating exf)ense in which the Division would participate. 

(n) In ordar to sooure appro' . 'al of the program and budg e t 
supported by fcoo rocoivod pursuant to G.S. 20 179.2. the 
area progmm shall include the programmat i c and budgotar)' 
data in the annual plan of work submitt e d to th e Division 
oaoh Fiooal y e ar. 

Statutory Authority G.S. 20-179.2; 122C-143; I43B-10. 

.1134 FUNDS FOR MULTIDISCIPLINARY 
EVALUATIONS: GUARDIANSHIP 

(a) To the extent state funds are available, the division 
shall provide reimbursement for court-ordered 
multidisciplinary evaluations of indigent persons in guardian- 
ship procedures under G.S. 35 1.16 35A-116 . The cost of 
the evaluation shall be borne by the respondent unless the 
respondent is indigent. 

(b) Area programs, other local agencies and private 
practitioners are eligible for reimbursement. 

(c) To obtain reimbursement the area program, other 
local agencies or private practitioners shall submit to the 
appropriat e — regional — offic e Division Fiscal Office the 
following: 

(1) fettf two copies of an itemized invoice which 
reflects the following: 

(A) name of respondent evaluated, 

(B) name of the evaluator for each respondent, 

(C) amount of time in hours or portion thereof 
required for each evaluation and report prepa- 
ration, 

(D) rate per hour for each evaluation, and 

(E) dollar amount for each evaluation. 

(2) three copies one copy of the individual court 
order. The copi e s of th e court order shall be 
attached to the invoice required in (o)(l) of this 
Rule so that throe of the four oopioo of the 
invoic e hav e a copy of th e court ord e r attach e d . 

(d) Determining Rate Per Hour. 

(Ij For area programs, the rate per hour required on 

the invoice under Part (c)(1)(D) of this Rule 

shall be the usual and customary charges of the 

area program before adjustment to the sliding 

fee scale. 

(2) For providers other than area programs the rate 

per hour shall be the usual and customary charge 

or their Medicaid reimbursement rate whichever 

is less. 

(e) — The regional office shall review the invoices and court 

ord e rs to d e termin e that all r e quir e m e nts in (o) of this Rule 

ha' . e boon mot. — If th e invoic .e s ar e in order and th e r e gional 

office has uncommitted multidisciplinary evaluation funds, 

the invoices shall bo initial e d for approval by the Regional 



Director or regional accountant and forwarded to the fiscal 
oorviooQ Goot i on of th e Divioion for paymont. 

(e) f^ The procedures in this Rule apply only to reim- 
bursement for evaluations to determine the necessity of 
appointing a guardian for an individual and do not apply to 
reimbursement for any treatment determined to be necessary 
as a result of the evaluation. 

Statutory Authority G.S. 122C147.1; 143B-10. 

.1135 FUNDS FOR FORENSIC SCREENING: 
CAPACFTY TO PROCEED TO TRIAL 

(a) To the extent state funds are available, the division 
shall provide reimbursement for court-ordered screening and 
evaluation of persons to determine their capacity to proceed 
to trial. 

(b) The screening or evaluation shall be performed by a 
qualified mental health professional or a qualified substance 
abuse professional who is registered with the Division as a 
forensic evaluator or a {>erson deemed a medical exjjert by 
the court. 

(c) Only area programs are eligible for reimbursement. 

(d) To obtain reimbursement the area program shall 
submit to the appropriate regional office Division Fiscal 
Office the following: 

(1) foHf two copies of an itemized invoice which 
reflects the following: 

(A) name of respondent screened or evaluated; 

(B) name of certified forensic evaluator for each 
respondent; 

(C) amount of time in hours or portion thereof 
required for each screening examination or 
evaluation; 

(D) rate per hour for each examination or evalua- 
tion; and 

(E) dollar amount for each examination or evalua- 
tion. 

(2) thr ee oopieo one copy of the individual court 
order. TTie oopioo of the court order shall be 
attached to the invoice required in (d)(1) of thi s 
Rule so that three of the four copies of the 
invoic e hav e a copy of th e court ord e r attach e d . 

(e) The rate per hour for each forensic evaluator required 
on the invoice under (d)(1)(D) of this Rule shall be the usual 
and customary charges of the area program before adjust- 
ment to the sliding fee scale. The amoimt invoiced to the 
division shall not exceed the rate approved by the Division. 

(0 The regional office shall review the invoices and court 
orders to determine that all requirerrtonts in (d) of this Rule 
have boon mot. — If th e invoic e s are in order and the regional 
offic e has uncommitt e d for e nsic sorooning or e valuation 
funds, the invoices shall bo init i al e d for approval by the 
Regional Director or his dos i gnoo and for i^ arded to the 
fiscal s e r . 'ic e o s e ction of th e Divioion for paymont. 

(f) {%) The procedures of this Rule apply only to reim- 
bursement for screening examinations or evaluations to 
determine the capacity of an individual to proceed to trial 



1461 



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November 1, 1995 



10:15 



PROPOSED RULES 



and do not apply to reimbursement for any treatment 
determined to be necessary as a result of the evaluation. 

Statutory Authority G.S. 122C-147.1; 143B-10. 

.1136 FUNDS FOR ASSAULTIVE CHILDREN 

(a) In furtherance of the Appropriation Bill of the 1981 
Session Laws, Chapter 859 and Chapter 1032, the Division 
shall administer a program of grants for tho ostabliahmont 
and opomtion of local programs funds to provide treatment 
to children under the age of 18 who suffer from emotional, 
mental, or neurological handicaps accompanied by violent 
or assaultive behavior and who have been certified as Willie 
M. class members in the case of Willie M., et. al. vs. Hunt 
et. al. The focus of these programs may include, but are 
not limited to, residential treatment programs and independ- 
ent living arrangements. 

(b) Programs operated by an area program or a private 
program contracted by the area program may spend funds 
for assaultive children for the following: 

(1) staffing; 

(2) travel; 

(3) supplies; 

(4) utilities; 

(5) administrative and program equipment; 

(6) administrative cost which can be clearly docu- 
mented through direct assignment or a Division- 
a pproved cost allocation method ; 

(7) transportation of clients; 

(8) other program noodo costs as approved by the 
Division; and 

(9) purchase, construction, alteration, improvement, 
or repair of a facility owned by the area pro- 
gram or county or non-profit contract agency 
according to the following provioiono: provisions 
of Rule .1123 of this Section. 

(A) — A request for initial renovation of a nowly 
acquir e d — facility — of fiv e — thouoond — dollara 
($5,000) or l e oo ahall b e oubmitt e d to th e 
appropriate regional office of tho Division for 
approval. — Initial minor repairs to facilitios of 
l e oo than one thouoond dollars ($1,000) shall 
b e approv e d by th e ar e a program. 

(B) — A request for alteration or improvomont of on 
existing facility in excess of five thousand 
dollara ($5,000) shall bo for * 'ardod to tho 
Division Dir e ctor's offic e through th e appro 
priato regional office of tho Division for ap 
proval . 
A r e qu e st for oonstruotion of a nov ^ ' faoilit)' or 



(G)- 



purchas e of an e xisting facility shall b e for 
wardod — to tho Division Director's office 
through tho appropriate regional office of the 
Division for approval. 
(B) — Each request as outlin e d in (b)(9)(B) and (C) 
of this Rule shall be accompanied by a narra 
tivo that explains tho nood for tho purchase. 



construction, alteration, improvement or repair 
of th e faoilit)' and a copy of the eoh e matio 
drawings and sp e cifications. — If approv e d by 
tho Division of Mental Health, Mental Retxir 
dation and Substance Abuse Ser^'icee those 
drawings and spooifioations shall be forv t 'ard e d 
to tho Division of Facility SeP i 'iooo for r e view 
and approval. 
(E) — Upon approval by the Division of Faoilit)' 
S e rvic e s th e ar e a program may prooood with 
th e completion of th e proj e ct and shall moot 



the- 



of G.S. H3 129 and G.S. 



provisions 
1 4 3 131. 

(F) — For oonstruotion, alt e ration or repair projeoto 
th e Division of Faoilit>' S e rs'io e o shall oonduot 
on aito inspections when the project is 33 
porcont complete and 67 percent oomploto and 
a final insp e ction when th e proj e ct is 100 
p e rc e nt complete. — Funds up to 15 poroont of 
tho coat shall bo advanced to an area program 
upon a written assurance from tho area direc 
tor that th e requirem e nts of G.S. 1'13 129 and 
G.S. 113 131 have b ee n m e t. — An additional 
30 porcont shall bo advanced after tho first 
inspection and the remaining 25 porcont shall 
b e paid after final insp e ction. 

{fS>) — Prior to tho purchas e of on e xisting facility th e 
area program shall submit two proport)' ap 
praisala to the appropriate regional office for 
r e vi e w and approval. Th e Division of Facility 
S e rs'lo e s shall conduct an on oito inspection of 
tho facility. — Following tho inspection and 
approval of the purchase by tho Division of 
Mental Health, M e ntal Retardation and Sub 
stanc e Abus e S e rvic e s, Division funds shall b e 
transferred to the area program. 

(H) — When tho expenditure of division funds for 
oonstruotion, alteration, r e pair or purchas e of 
a facilit>' is fifty thousand dollars ($50,000) or 
more the area board shall obtain written assur 
once from tho o' ^ nor of tho facility that tho 
facility shall — r e main availabl e — for M e ntal 
H e alth, — M e ntal — R e tardation — and Substxmco 
Abuse Sor^'icos. 

(^ If a facility owned by an area program or its 

private non profit oontraot agency was pur 
ohos e d, — alt e r e d, — improv e d, or rohabilitnt e d 
uaing funds for assaultive children and later 
ceases to the used by the area program or its 
private non profit oontraot ag e ncy for oeP i 'icoB 
for m e mb e rs of tho Willie M. olaoo, th e faoil 
ity shall be sold at tho current fair market 
value OS dotorminod by tv ^ 'o indofwndont ap 
praisala aoo e ptablo to th e Division and the 
Division shall be reimburs e d a pro rata share 

of tho proceeds of the sale based on tho 

porcont of contribution made by the Division 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1462 



PROPOSED RULES 



in tho purohoflo, alteration, improvomont or 
rohabilitation of th e faoilit)'. — If an ar e a pro - 
gram or ito private non profit oontraot ag e ncy 
wishes to retain a faoilit)' that was purchosod, 
ahcrod, improved, or rohabilitatod using fundo 
for aooaultivo ohiidron. th e area program or its 
private non profit oontraot ag e noy shall pay to 
tho Divioion a pro mta ohoro of tho current fair 
market value of tho facility aa determined by 
two ind e p e ndent appraioalo aoo « ptabl e to th e 
Di' . 'ioion based on the oontribution mad e by th e 
Division in tho purchaao, alteration, improve 
mont, or rehabilitation of tho facility. — The 
oontributiono mad e by all partioo ohall b e 
maintained individually on a perpetual basio in 
the lodger or group of accounts in which tho 
details relating to the general fixed assets of 
the ar e a program or ito privat e non profit 
oontraot agenoy are maintain e d. 

(c) Funds provided by the Division to support the services 
provided to a Willie M. program shall be discontinued if the 
program fails to serve any Willie M. clients for a period of 
45 consecutive days unless an extension of time is approved 
in writing by the Division Director. 

(d) Funds for assaultive children shall not be used in 
specific programs to serve children who are not Willie M. 
class members if any class member who is in that zone and 
who is appropriate for the specific program being funded 
remains unserved. The zones within the state shall be 
determined by the Division. Funds shall not be expended 
for any program that does not serve Willie M. class mem- 
bers. Funds shall not be used to start or operate a service 
in its entirety which serves a disproportionately small 
number of Willie M. clients. The Division shall negotiate 
the minimum number of Willie M. children who shall be 
served in each program and shall specify that number in the 
grant award notice. 

(e) Funds for assaultive children may be used to support 
the cost of treatment for members of the Willie M. class 
who attain the age of eighteen if the member continues to be 
in need of such treatment and will benefit from continued 
placement or involvement in the program. However, such 
support shall not be in excess of six months following the 
class member's 18th birthday or the end of the fiscal year 
in which the class member reaches 18 years of age, which- 
ever comes later. 

(0 To apply for fund o administ e r e d under thi o Rul e , an 
annual plan and budget for such funds shall be included in 
tho appropriate area program's total annual plan and budget 
packag e wh e n it is oubmittod to tho appropriat e r e gional 
offic e of th e Division. The annual budget for programs 
serving Willie M. clients shall be submitted in accordance 
with the Willie M. Unit Cost Reimbursement Plan for the 
fiscal year. 

(g) The annual budget for programs serving Willie M. 
clients shall be budgeted into separate cost centers. Such 
cost centers shall include all sources of revenue which 



support the direct cost of services for Willie M. clients. 
Funds exjjended for services to Willie M. clients such as 
outpatient visits, emergency services, or case management 
services may be budgeted within the area program cost 
center which provides that service if the area program 
maintains sufficient statistical data to indicate the service 
provided to the Willie M. client and the cost of the service. 

(h) The area program shall provide financial and statisti- 
cal refxjrts regarding funds for assaultive children to the 
Division according to instructions of the Division. 

(i) The limitation on the number of inpatient days as 
contained in 10 NCAC 14D .0006(a)(1)(C); USE OF 
DIVISION FUNDS FOR INPATIENT SERVICES; shall 
not apply to Funds for Assaultive Children. 

Statutory Authority G.S. 122C-147; 122C-150. 

. 1 137 FUNDING DRUG EDUCATION SCHOOLS 

(a) Pursuant to G.S. 90-96.01 the Department of Human 
Resources shall have the authority to approve programs, 
budgets and contracts with public and private governmental 
and nongovernmental bodies for drug education schools 
operated by an area program or Ofjerated by a contractor 
through a contract with an area program. 

(b) Fees paid by persons enrolling in a drug education 
school established pursuant to G.S. 90-96.01 shall be used 
to support the schools except as indicated in Paragraph (e) 
of this Rule. Other funds to support the schools may come 
from multiple sources such as, but not limited to, county 
general funds, state appropriations, federal appropriations, 
and receipts for services (patient fees). This Rule is 
established to set accounting requirements for the fees 
received pursuant to G.S. 90-96.01. 

(c) Fees received pursuant to G.S. 90-96.01 shall be 
limited to purchases of the following: 

(1) to rent or lease space to conduct drug education 
school classes if sufficient space is not available 
in area program facilities; 

(2) personnel and support costs necessary to assure 
a systematic and timely processing of referrals to 
drug education schools; 

(3) supplies and materials necessary for the efficient 
and timely operation, evaluation and administra- 
tion of drug education schools and for develop- 
ing and maintaining an efficient liaison process 
with the judicial system, interested community 
groups, and the Department of Human Re- 
sources; 

(4) non-administrative equipment necessary for the 
operation of drug education schools; 

(5) administrative equipment for drug education 
school personnel employed full-time and a 
pro-rated amount for persormel assigned less 
than 100 percent of the time to drug education 
schools; 

(6) renovations that do not result in the acquisition 
of real property by the area program; 



1463 



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November 1, 1995 



10:15 



PROPOSED RULES 



(7) travel required for the effective operation of the 
drug education schools; 

(8) area program administrative costs that can be 
documented as chargeable to the schools; and 

(9) other necessary operating expenses as approved 
by the Division. 

(d) Fees received pursuant to G.S. 90-96.01 shall not be 
used for acquisition of real property by the area program. 

(e) Fees received pursuant to G.S. 90-96.01 shall be used 
to support the operation, evaluation and administration of 
the drug education schools to the extent that the schools are 
fully accredited by the Division. Any excess fees received 
pursuant to G.S. 90-96.01 are to be used to continue or to 
expand alcohol and drug services. 

(f) Fees received pursuant to G.S. 90-96.01 shall not be 
used in any manner to match state or division funds or to be 
included in any computation for state or division formula 
funded allocations. 

(g) Fees received pursuant to G.S. 90-96.01 shall be 
consistently identified as such. All such fees remaining at 
the end of the area program's fiscal year shall retain their 
identity and the fund balance of the area program shall be 
so restricted as to assure continued use of the fees for the 
drug education schools or to continue or to expand other 
alcohol and drug abuse services. 

(h) Area programs shall maintain records which indicate 
which individuals have paid for the drug education schools. 

(i) F*ursuant to G.S. 90-96.01, area programs shall 
receive fees from either the person enrolled in the class or 
from the judiciary. The individual enrolled in the school 
shall pay the fee to the area program providing the school, 
except that if the clerk of court in the county in which the 
person is sentenced agrees to collect the fees, the clerk shall 
collect all fees for persons sentenced in that county. The 
clerk shall pay the fees collected to the area program 
serving the catchment area in which the clerk is located 
regardless of where the person attends the school. 

(j) Area programs receiving fees from the judiciary for 
individuals who will be enrolled in schools operated by 
other area programs shall transfer 80 percent of the fees 
received from the judiciary for those individuals to the area 
programs enrolling the individuals u[>on receipt of an 
invoice. The 80 percent shall be transferred to the area 
program providing the school regardless of whether the 
individual attends the school. 

(k) Area programs receiving fees directly from an 
individual who has been sentenced in a county outside the 
area program's catchment area shall transfer 15 percent of 
the fees collected to the area program which serves the 
county where the individual was sentenced upon receipt of 
an invoice from the area program serving the county where 
the sentencing occurred. Any area program not desiring to 
collect the 15 percent from another area program is not 
required to invoice that program. A decision not to collect 
the 15 percent shall be approved by the area board and 
documented in the board minutes. An area program that 
does not desire to invoice another area program shall honor 



invoices presented to it from other area programs that desire 
to collect the 15 percent. 

(1) Five percent of all fees received by the area program 
pursuant to G.S. 90-96.01 shall be forwarded to the Deport 
mont of Human Rooourooa Division of MH/DD/SAS on a 
monthly basis. The check for 5 percent of the fees received 
shall be accompanied by a transmittal indicating from whom 
the fees were received. The area program that initially 
receives the fees from the persons paying the fees or from 
the judiciaiy system shall be responsible for transferring the 
5 percent to the D e partm e nt Division . Checks shall be 
made payable to and sent to: Division of Mental Health, 
Developmental Disabilities Montal Retardation and Sub- 
stance Abuse Services, Fiscal Services Section. ControU e r'a 
Offio e , Suite 4403 612, 325 North Salisbury Street, Raleigh, 
North Carolina 27603 - 5906 J7^44. 

(m) The amount of fees transferred to another area 
program or to the division as indicated in (j) through (1) of 
this Rule shall be recorded in the accounting records to an 
account number designated by the Diviaion in its uniform 
chart of accounts as transfer of DES Fees . Under no 
circumstances shall the transfer of fees be recorded as an 
operating expense in which the Division would participate. 

(n) In order to secure approval of the program and budget 
supported by fees received pursuant to G.S. 90-96.01, the 
area program shall include the programmatic and budgetary 
data in the annual plan of work submitted to the Division 
each fiscal year. 

Statutory Authority G.S. 90-96.01; 122C-132; 122C-143. 

.1138 COMMUNITY SUPPORT SERVICES FOR 
CHRONICALLY MENTALLY ILL 

(a) — Th e Divioion shall maintain a program of grants to 
area programs for the purpooo of providing oonmiunit)' 
based support sop i 'icos for chronically mentally ill adults and 
elderly individuals ser i 'od by area programs and their 
contract ag e noi e o. — The grants are: 

f4^ funds for oommunit)' oupport day/night programs 

for the chronically mentally ill, and 

(3) funds for community based support sen i 'ices for 

th e ohronioally m e ntally ill. 

(b) — This Paragraph appli e s to th e funds reforonood in 
(a)(1) of this Rule. — Not le s s than three hundred sov 
onty four thousand dollars ($37 4 ,000) annually plus applica 
bl e inflation and oalar)' inoreaso funds appropriat e d by th e 
L e gislatur e shall b e spent to op e rat e community support 
day/night programs in area programs which had a program 
operating prior to fiscal year 19 8 1 8 2 (Mountoinhouao — 
Blu e Ridg e Ar e a Program; Sunshine House — N e w Riv e r 
Ar e a Program; Pi e dmont Pioneer House — Gaoton/Linooln 
Area Progmm) in an amount not to exceed twenty thousand 
dollars ($20,000) plu s applicable — inflation and — s alary 
inor e oo e funds p e r program p e r y e ar. — Funds may also b e 
administ e r e d to n e w programs, but oupport for oaoh now 
program shall not exceed fifty thousand dollars ($50,000) 
per year plus applicable inflation and salary' increase funds. 



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1464 



PROPOSED RULES 



If tho programa funded with those granto ore day/night 
programo thoy ohall m ee t tho otandnrdo for Communit>' 
Support Programo for Adultc and Elderly Individualo Who 
j\ro Chronically Mentally III aa codified in 10 NCAC 1 8 P 
Section .0500. Those funda may not bo usod for support of 
inpati e nt eop - 'io e o. — Programo op e rated by an ar e a program 
or oontraot programo of tho ar e a program or e e ligibl e for 
funding of tho following oxpendituroo! 

f4^ staffing: 

(S) trav e l; 

(3^ Qupplioo; 



{4) administrative and program equipment; 

{Sr^ repairs — and — maintenance — of facilities — which 

roprooont normal upk e ep and do not mat e rially 
inoroaoo the valu e of th e facility or e xt e nd ito 
useful life (these funds shall not bo used for 
purchase of real property); and 

(4) other program n ee ds ao approv e d by the Divi 

{e) — Funds for community based support sor i 'icoe for tho 
chronically mentally ill not referenced in (h) of this Rule 
may b e us e d to provid e an array of oor i 'io e e for tho ohroni 
oally m e ntally ill including, but not Umit e d to, oooe manag e 
ment, emergency sorvicoa, — inpatient sor^'iooo, rooidontial 
services and community support day/night programs as 
dooorib e d in (b) of this Rul e . — Programs roooiving fundo for 
oommunity baood support Dor < 'io e o shall moot the applicabl e 
standarda for the particular sorvico aa codified in 10 NCAC 
1 8 1 through 1 8 Q. These funda shall be administorcd to aroa 
programs on a p e r capita basis utilizing th e moot curr e nt 
population data available from Offic e of Stat e Budget and 
Managomont. — Those funds shall bo oxpondod aa follows: 

f4-) Programs — operated — by — an — oree — program — er 

oontraot — programs of th e ar e a — program ar e 
e ligibl e for funding of th e following e xp e nd! 
turoB! 
fA) — staffing: 
fR) — trav e l; 

(€) suppli e s; 

(©) — administrative and program equipment; 

fE^ — other program needs as approved by tho Divi 

sion; and 
(F) — r e pairs and maint e nanc e of faoiliti e e, oth e r 
than residential facilities which are governed 
by (cX2) of this Rule, which represent normal 
upke e p and do not mat e rially inoroaoo tho 
valu e of th e facility or e xt e nd ito us e ful lif e . 
Except for residential facilitioo ao provided for 
in (c) (2) of this Rule, these funds shall not bo 
us e d for purchas e of r e al property. 

(3) Fundo for oommunity based support oervioeo for 

the chronically mentally ill may bo used for the 
purchase, construction, alteration, improvement 
or r e pair of a r e cidontial facility by th e ar e a 
program or a non profit board with division 
approval. — Tlie program shall moot the require 
monto of the following: 



{A) — Tho Roflidential Facility Mortgage Payment 
Progmm. Th e Division may partioipato in tho 
mortgage paym e nt program in part or in total 
dopopdont upon tho availability of state fund s . 
(B) — Th e Residential Facility Purohaflo/Construotion 
Program. 

(+) Th e Division may participat e in tho down 

payment or lump sum purchase or con 
s truction of a residential facility in whole 
or part contingent upon th e availability of 
stat e fundo. 

(») The aroa program or non profit board shall 

secure two property appraisals for review 
and approval by th e Division prior to 
purchas e . 
(iii) — If a new construction grant is roquootod, 
tho area program shall submit two con 
s truction bid oontraoto from two building 
oontractoro — to the appropriat e regional 
office for review and approval prior to 
construction bid lotting. 
(G) — A roquoot for initial renovation of a newly 
acquir e d residential facility of fiv e thousand 
dollars ($5000) or lees shall bo submitted to 
the appropriate regional office of the Division 
for approval. — Initial minor r e pairs to rooidon 
tial faoiliti e o of looo than on e thouoond dollars 
($1000) shall bo approved by tho area pro 
gram. 
(B) — A roquoot for alt e ration or improv e m e nt of an 
e xioting rooidontial facility in e xoooo of five 
thousand dollars ($5000) shall bo forwarded to 
tho Division Director's offioo through tho 
appropriate regional offic e of the Divioion for 
approval. 
(E) A roquoot for alteration or improvement of an 
existing — facility — of five — thousand — dollars 
($5,000) or l e ofi ohall be submitt e d to th e 
appropriat e r e gional offic e for approval. 
fF) — Each request as outlined in (c) (2) (B) and (D) 
of this Rule shall bo accompanied by a narra 
tiv e that explains tho nood for th e purchas e , 
construction, alt e ration, improv e m e nt or r e pair 
of tho facility and a copy of tho schematic 
drawings and sfHJcificat i ons. — If approved by 
th e Division of Mental H e alth, M e ntal R e tar 
dation and Substanc e Abus e Sen . 'io6fl, th e s e 
drawings and spocifioations shall bo for * 'ardod 
to the Division of Facility Services for review 
and approval. 
(G) — If th e rooidontial facility is op e rat e d by a 
non profit board, tho area program shall si^ 
Q legally binding contract with tho private 
non profit ag e ncy — for e ith e r — the — mortgag e 
payments to bo mad e or th e purchas e or con 
struction program as indicated in (c) (2) (A) 
and (B) of this Rule. — A copy of tho appropri 



1465 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



) 



ato contract shall bo obtained from tho Fiscal 
Sorv'iooo Branch of the oontrul offic e of th e 
Divioion. 
(H) — If a rooidontial facility owned by an area 
program or ita private non profit contract 
agency woo purohatiod, alt e r e d, improv e d, or 
rehabilitat e d uoing division fundo and lat e r 
coofloo to bo used in tho delivery of services to 
clionts by the area program or its private 
non profit contract ag e ncy, th e facility shall b e 
sold at tho curr e nt fair mark e t value as d e t e r 
ffli flod by tv ^ 'o indopondont appraisals accept 
able to tho Division. — The Division shall bo 
roimburoed a pro rata share of the proooodo of 
tho sale baoed on the p e rc e nt of contribution 
mado by the Division in tho purchase, alter 
ation, improvement or rehabilitation. If an area 
program or its non profit contract program 
wiohoo to r e tain a facility that woo purchas e d, 
altered, improved or rehabilitated using funds 
for Communit)' Support Sor>'ico 9 for Chroni 
oally Mentally III, the area program or its 
contract program shall pay to tho Divioion a 
pro rata aharo of tho current fair mnrkot value 
of tho facUit)' OS dotorminod by two indopond 
ont appmioalo acc e ptabl e to the Divioion baoed 
on contribution mad e by th e Division in th e 
purchase, alteration, improvement or rehabili 
tation of the facility. — This provision may bo 
waivod by tho Divioion Dir e ctor upon written 
roquoot of th e program. — Th e ar e a program 
shall maintain records on a continuous basis 
which rofloct tho amount of contribution for 
purchaoo, alteration, improv e ment, or rehabili 
tation by th e Division, ar e a program or oth e r 
funding ontit>'. 
(d) Fund Balance. — An allowance for a fund balance for 
area programo or contract programs for both t)'p e s of 
community support funds io mad e in Rul e .1125 of thio 
Section. 

(o) Application for on allocation of both t^'poa of commu 
nit>' support fundo shall b e as follows: 

^V) To apply for funds an annual plan and budg e t 

for such fiindfl shall bo included in the appropri 
ato area program's total annual plan and budget 
package v ^ 'hon it io oubmitt e d to th e appropriat e 
r e gional offic e of the Divioion. 

(3) Funds shall be allocated by tho Director of tho 

Division among tho regional offices. 

(3) Bas e d on th e annual plan and budg e t oubmitt e d 

and availability of fundo, allocation of funds for 
area programs within each region shall bo made 
by the Division Director or hi s dosignoo. 

Statutory Authority G.S. 122C-1 12(a)(6); S.L. 1981 C. 
1007; 122C-143; 122C-147; 122C-150. 



.1139 FUNDS FOR TREATMENT 

ALTERNATIVES TO STREET 
CRIME 

(a) In furtheroDoo of on appropriation reoeivod from the 
North Carolina Legislature, tho Division shall administer a 
program of grants to Guilford Ar e a Program and Wake 
Aroa Program to reduc e drug related crim e and criminal - 
recidivism among substance abusing offenders by providing 
a mechanism for referral — of appropriate offender s to 
community bas e d tr e atment programo. — The grants shall b e 
call e d Funds for Tr e atm e nt Alt e mativ e o to Str ee t Crime. 

(b) Funda for Treatment Alternatives to Street Crime shall 
bo administered to area programo on a match basis. — The 
match ratio ohall bo no loss than 20 p e rc e nt local funds and 
no mor e than 8 p e rc e nt Fundo for Tr e atm e nt Alt e mativ e o 
to Street Crime. 

(e) — Programs operated by an area program or a private 
program contract e d by th e area program may e xp e nd Funds 
for Treatment Alt e mativ e o to Str ee t Crim e for th e follow 

{i^ Staffing; 



(^ 



trav e l; 



(3) ouppli e o; 

(4) utilitios; 

(5) administrative and program equipment; 

(6) repairo — and — moint e no Hee — of faciliti e a — which 

r e pr e s e nt normal upkeop and do not mat e rially 
increase tho value of the facility' or extend ita 
useful life; and 

f?^ oth e r program needs ao approv e d by th e Divi 

(d) Funda for Treatment Alternatives to Stroot Crime shall 
not bo used for tho purchase of roal property. 

(e) — To apply for fundo adminiotorod under thio Rul e , an 
annual plan and budg e t for ouch fundo shall bo included in 
tho appropriate area program's total annual plan and budget 
package when it is submitted to tho appropriate regional 
offic e of th e Division. 

Statutory Authority G.S. 122C-132; 122C-143; 122C-147. 

.1140 COMMUNITY MENTAL 

HEALTH SERVICES BLOCK GRANT 

(a) The Division shall administer a grant program for the 
federal Alcohol/Drug and Community Mental Health 
Services Block Grant which is made available to the 
Division under the authority of Public Law 97 35 102-321 . 

(b) The appropriate pwrtion of funds in tho block grant 
which are made available to the Division for alcohol, drug 
a«d Community mental health services shall be us e d to 
mak e grants to e ligible programo for tho provioion of 
comprehensive sors'lcoo. — In aooordanoo with federal law, 
area programs recoivmg grants under tho Community' 
M e ntal H e alth Centers Act as of Octob e r 1, 19 8 1 shall 
continue to bo funded until ouch tim e ao th e grant would 
havo expired if tho Community Mental Health Centers Act 
had boon continued. Tho annual allocation for tho oontinu 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1466 



PROPOSED RULES 



ing montal health grantees shall be at a lovol proportionato 
to tho roduotion in tho fodoral appropriation, made available 
to eligible programs. The purpose of these funds is to 
provide comprehensive community mental health services to 
adults with a serious mental illness and to children with a 
serious emotional disturbance who meet the UCR criteria 
for Level 1 or Level 2^ 

fe^ — RequircMi Sorv'iooo. — To bo oligiblo to roooivo block 
Grant funds, an area program shall provide tho following 
6or » 'io e 6: 

f4^ outpatient oop - 'io e o, including opooioliaod outpa 

ticnt sorv'icoa for children, tho elderly, individu 
als who are chronically nwntally ill, and reoi 
donto of ito oop . 'ioo aroa who have boon dio 
charged from inpati e nt treatm e nt at a m e ntal 
health facility; 

(3^ 2 4 hour a day omergoncy care sor i 'icoB; 

{^) day treatment or othor partial hospitalization 

sorvioeo; 

{A) s creening — for patients being considered — fef 

admission to state mental health facilities to 
determine the appropriaton e se of ouch admiooion; 

(#) consultation and education ser i 'ioos. 

(c) The mental health services shall be provided within 
the limits of the capacity of the area program, to any 
individual residing or employed in the service area of the 
center, regardless of ability to eSY for such services, in a 
manner which preserves human dignity and assures continu- 
ity and high quality care. 

{4^ — R e quir e d Exp e nditur e s — Alcohol and Drug. — On a 
statewide basis, block grant funds for alcohol and drug 
soP i 'lcos shall bo expondod in accordance with tho following: 

ft9 At leoflt 35 p e rc e nt of th e funds for alcohol and 

drug Borviooo shall bo expended for programs 
and activities related to alcoholism and alcohol 
abuse. 
(2) At l e ast 35 percent of th e funds for alcohol and 
drug GOP i 'io e s shall b e e xp e nd e d for programs 
and activities relating to drug abuso. 

(53 At least 20 pwrcent of tho amount used for 

alcohol and drug abus e s e rvic e s shall b e e x 
p e nd e d for prevention and e arly int e r . ' e ntion 
programs designed to discourage the abuse of 
alcohol or drugs, or both. 
The Division shall revi e w propos e d e xp e nditur e s of all ar e a 
programs and if the perc e ntag e r e quir e m e nts for s e rvic e s 
and prevention spocifiod in (d)(1), (2). and (3) of this Rule 
are not met. the Division shall require changes in area 
program — e xpenditur e — patt e rns — te — moot — those — f e d e rally 
mandat e d r e quir e m e nts. 

(d) Funds shall not be expended for any of the following 
uses: 

(1) to provide inpatient services. 

(2) to make cash payments to clients. 

(3) to purchase or improve land, purchase, construct 
or permanently improve any building or other 



facility, or purchase major medical equipment. 

(4) to satisfy any requirement for the expenditure of 
non-Federal funds as a condition for the receipt 
of Federal funds. 

(5) to provide assistance to any entity other than a 
public or nonprofit private entity .or 

(6) to support any individual salary in excess of one 
hundred twenty five thousand dollars 
($125.000). 

(e) The Division Director shall allocate annually funds to 
the area programs. Non Eligible Exp e nditures. — Blook grant 
funds shall not be used for tho purchase of rool property or 
to fund mental retardation or inpatient aon i 'icoo. — Inpatient 
sorvioeo ore defined — oo thooo oor^'iooo — provid e d to tho 
e motionally disabl e d, alcoholic, or drug abus e r which or e of 
a medical nature and are rendered in a hospital sotting to 
which the consumer of the 8or . 'icefl has boon admitted as a 
patient. 

(0 Matching. — i\rea programs shall b e r e quired to match 
block grants at the same ratio aa they were required to 
match federal funds during tho 19 8 8 1 fiscal year which 
ar e now includ e d in th e block grant. 

(g^ — Allocation Among Regional Offic e s. — Th e Division 
Director shall allocate annually block gmnt funds among tho 
regional offices of tho Division. — At tho diocrotion of tho 
Division Dir e ctor, th e Regional Dirootor shall allooato tho 
blook grant funds among tho eligibl e ar e a programs of th e 
region. 

(f) (b) Block grant funds allocated shall be used to 
supplement and increase the level of state, local, and other 
non-federal fiinds and shall, in no event, supplant such state, 
local, and other non-federal funds. The Division shall 
monitor compliance by comparing total budgeted revenues 
for the current fiscal year with those budgeted for the prior 
fiscal year for each area program exclusive of block grant 
fiinds. If block grant funds are reduced, the area program 
may reduce its participation in a proportionate manner. 

(i) To apply for blook grant funds, an area program shall 
includ e an annual plan and budget for such funds in ito total 
annual plan and budget package when it is s ubmitted to tho 
appropriate regional office of tho Division. 

Statutory Authority G.S. 12C-141; 122C-143.1; 122C-143.2; 
122C-144.1; 122C-I47; 122C-147.1; 122C-147.2; P.L. 102- 
321. 

.1141 CONTINUITY OF CARE 

Tho area program and division shall follow tho provisions 
of 10 NCAC 18V .0001 through .000 8 ; CONTINUITY OF 
Ci\R£: (division publication APSR 120 2) in planning and 
budg e ting for continuity of care for p e rsons coming under 
tho provisions of General Statute 122C 63. 

Statutory Authority G.S. 122C-132; 122C-147. 

. 1 142 ALLOCATION OF OUTPATIENT 
COMMITMENT FUNDS 



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NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



(a) Outpationt involuntary' oommitmont oonsiato of mental 
hoalth troatmont, looo int e noivo than poyohiatrio hoopitaliza - 
tion, — that io ordorod by the oourt purouant to G.S. 
122C 271. — Outpationt troatmont may includo modioation; 
individual or group thompy; day or partial day programm ifig 
aotivitioo; oorviooo and training including e duoational and 
vocational aotivitioo; oupop i 'ioion of living arrangom e nto; and 
any othor oorvicoo proscribed to alloviato the person's illnoao 
or diaabilit)', to maintain somi indopwndont functionia gT-ef 
to proi i 'ont further dotorioration that may rooult in the 
nooosoit)' for oommitmont to an inpatient pa>'ohiatrio faoilit>'. 

(b) The Divioion shall allocate funds to each region on a 
per capita baoio. 

(o) The appropriat e r e gional offic e of th e divioion ohall 
allocate fimdo to area programa baood on an actual commit - 
mont basis, not to oxoood the amount ao approved by the 
Lxigislaturo por year per case. — Aroa programa shall com 
ploto th e "Outpationt Involuntar>' Commitment Roimburo e 
ment" form each month to r e c e iv e roimburoem e nt. — R e im - 
bursement shall bo made as follows: 

(^ Area programs shall bo allocated 1/12 of the 

annual appropriated amount approv e d by th e 
Legislature p e r y e ar por oao e for each client 
under outpationt involuntary' commitmont r- 

(3) Area programa shall receive a full month's 

allocation — for outpationt — involuntar)' oliento 
whose date of oommitmont io from th e lot 
through the 15th of any month. — j\rea programs 
shall receive one half the monthly allocation for 
outpationt involuntary oliento whoo e dat e of 
commitm e nt oocuro after th e 15th of the month. 
If a client's involuntary commitment terminates 
from the 1st tlirough the 15tb of any month, the 
area program ohall receive a half month's allooa 
tion. If a oU e nt'o outpati e nt involuntar)' commit 
ment terminates after the 15th of the month, the 
area progmm shall receive a full month's alloca 

(3^ Monthly paym e nts to the area program ohall 

continue for the length of the client's outpatient 
commitment or until the annual appropriation for 
th e program io fully d e pl e t e d. 

(4^ Ar e a programs ohall forward a copy of the 

commitmont ordor form AOC SP 203 to the 
regional office to coincide v ^ 'ith the time frame 
of the roimburoement request. — Roimburoement 
will not b e proo e oBed until th e AOC SP 203 
form io received by the regional office. 

(5) Reimbursement requests shall bo submitted to 

the regional offioo for payment within 9 dayo 

aft e r th e month in which o e p . 'io e io r e nd e r e d. 

Reimbursement roquosts submitted after 90 days 

may bo paid based upon availabiht>' of funds and 

divioion approval. 

(4) — Outpatient commitment funds shall b e allocat e d to 

area programs in addition to othor funds they rocoivo. 

(e) The Division shall conduct cost studios at fiscal year 



end to determine if the funda ollooatod to area progfams 
oxoood th e actual coot of sorvioe. 

Statutory Authority G.S. 122C-1 12(a)(6); 122C-147; 
122C-271; S.L. 1983, c. 864. 

.1143 SOUTH CENTRAL 

DEEVSTITUTIONALIZATION 
PROGRAM FUNDS 

(a) Th e Divioion ohall administer a program of gronto to 
b e known ao oouth c e ntral d e institutionalization program 
funds. 

(fe) — South central deinstitutionalization program funda 
shall b e mad e availabl e to th e oouth c e ntral r e gion by th e 
Divioion to mov e th e focuo of oor^'icoo from largo oontral 
ized institutions — te — small — appropriate — community baaed 
programa and 9or . 'icos. The goal of these program funds i s 
to o e p i ' e , in a oommunit)' boo e d oetting, acut e ly and ohroni 
oally m e ntally ill p e roona curr e ntly in the oommunity ao well 
aa thoso sorvod at Dorothea Dix Hoapitxil. 

(c) South control deinstitutionaUzation program fiinda aholl 
b e admlniot e r e d to ar e a programo uo direct gronto not 
r e quiring local matoh. 

(d) South oontral doinatitutionolization program funds may 
bo used for repairs and maintononco of faoilitioo which 
r e pr e o e nt Dormal upk ee p and do not mat e rially inor e oa e th e 
valu e of th e focilit)' or e xt e nd ito useful life. 

(e) — Applicotion for south control deinstitutionalization 
progmm fund s shall be made by submitting on onnual plan 
and budg e t to th e oppropriot e regional office. 

(f) Boo e d on th e approv e d annual plan and budget roquoot 
submitted and availability of funds, allocation of south 
control deinstitutionolLzotion progrom funds to area progroma 
sholl b e mode by the oouth c e ntrol R e gionol Director \ ^ 'ith 
th e ooDourr e no e of th e Division Dir e ctor. 

Statutory Authority G.S. 122C-1 12(a)(6); S.L. 1983, 761, 
Section 28. 

.1144 REPLACEMENT OF LOST BLOCK GRANT 
FUNDS FOR MENTAL HEALTH 

(a) Th e Divioion ohall mak e ovoilabl e dir e ct gronto to ar e a 
progromo for th e r e plac e m e nt of loot block grant funds for 
mental hoalth under the authorization of G.S. 122C 150. 

(b) Thoao funds sholl be mode available to area programa 
to oupplomont o r e duction of blook grant fundo for m e ntal 
h e alth. 

{e) — Replacement of loot blook grant funds for mental 
hoalth shall bo odminiaterod to oroa programa oa direct 
grants not requiring local match. 

(d) — R e ploc e ment of loot block gront fimdo for m e ntal 
health may be uaod for ropoirs and maintenonce of focilitiea 
which represent normal upkeep and do not materially 
incr e as e th e volu e of th e fooilit)' or e xt e nd ito uooful life. 

( e ) To opply for replaoomont of loot block grant fundo for 
mental hoalth, on annual plan and budget for such funds 
shall be includod in the appropriate oroa program' s total 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1468 



PROPOSED RULES 



annual plan and budgot package whon it ia oubmittod to the 
rogional office of tho Divioion. 

(f) Baood on tho approvod annual plan and budg e t r e qu e ot 
submitted and avoilabilit)' of funds, allocation or roplaoo 
mont of loot block grant funds for montnl hoolth to aroa 
programs shall bo mad e by th e appropriat e R e gional 
Dirootor with tho oonourrono e of tho Divioion Dir e ctor. 

Statutory Authority G.S. 122C-112; 122C-147; 122C-150. 

. 1 145 DEVELOPMENTAL DAY CARE 
GRANTS-IN-AID 

(a) Tho Divioion shall adminiator a program of grants to 
ftfea — programs — te — be — oall e d — dev e lopm e ntal — day — eafe- 
grants in aid. 

(b) Dovolopmontal day earo grants in aid shall bo admin 
istorod to area programs up to a stimdard rato per month as 
approv e d by th e Gen e ral Asoombly. Divioion Dir e otor or 
both, unlooo adminiot e rod on a total cost baaio with th e 
Division Diroctor's approval in accordonoo with Section 26 
of tho "Area Program Budgeting and Procoduroa Manual" 
(divioion publication iiVPSM 75 1) adopt e d pursuant to G.S. 
150B H(o), ao publiohod June 27. \9 % ^. Copi e s of S e ction 
26 of tho "Area Program Budgeting and Procoduroa Man 
ual" may bo inspoctod at tho Raleigh offico of tho Divioion 
or copi e s may b e obtain e d from tho Publications Offic e of 
th o Division at a charg e which cov e rs printing and postag e . 

fe^ — Children in whoso bohalf funds are administered to 
programs shall bo: 

(4^ montfllly rotnrdod, oth e rwis e d e v e lopmontfllly 

disabl e d. — dovolopmentally — delay e d. — or hav e 
atypical dovolopmont or bo infants or toddlers at 
high risk for any of those conditions, for whom 
a disability of> e oiFio diagnosis io inappropriat e ; 

(5) between tho ages of birth and 19; and 

(5) residents of North Carolina- 
id) Children with mod e rat e , s e vere, or profound m e ntal 
retardation, substantial other developm e ntal disabiliti e s, or 
infants or toddlers with or at high risk for developmental 
de l ays, developmental disabilities, or atypical development 
shall be giv e n first priority for availabl e funds. Childr e n 
determined to b e oubotontially d e v e lopm e ntally disabled shall 
bo those functioning at either Lovol I or Level 11 as defined 
in "Pioneer Funding System Operating Manual. Volume III: 
L e v e l — of Eligibility. — S e ction — 4-; — Child — D e v e lopm e ntal 
Disability". — Pr e school childr e n with mild m e ntal r e tarda 
tion. other mild developmental disabilities, developmental 
delay s or those with atypical dovolopmont shall bo given the 
n e xt priority for availabl e funds if thoy meet th e e ligibility 
r e quir e m e nt sp e cified in (c) (3) of this Rul e and if prior 
approval of tho appropriate regional director or designee is 
obtained. 

fe^ — To apply for d e v e lopmental day car e grant in aid 
funds an annual plan and budgot for ouch funds shall b e 
included in tho appropriate area program's total annual plan 
and budgot package whon it is submitted to the appropriate 



rogional office of tho Division. 

(f) — Funds for dev e lopm e ntal day oaro shall be allocat e d 
among th e r e gionc of the Divioion by th e Divioion Dirootor. 

(g) Dioburoomont of dovolopnaontal day oaro grant in aid 
funds shall be made after approval of tho plan and budgot by 
th e R e gional Dirootor. 



Statutory Authority G. S. 
122C-147. 



122C-1 12(a)(6); 122C-131; 



.1146 RESIDENTLVL FAdLITIES FOR 

SEVERELY MENTALLY ILL ADULTS 

(e^ Pursuant to G.S. 122C 150, tho Division shall 

administ e r a program of grants to area programs to b e 
oall e d ftinds for resid e ntial facilities for s e v e rely mentally ill 
adults. 

fb) — Such grants shall bo used to support residential 
faciliti e s for s e ver e ly mentally ill adults. 

(o) Funds for residential faciliti e s for s e verely m e ntally ill 
adults shall bo administered to area programs as direct 
grants and do not require local matching. 

(d) — Programs op e rated by an ar e a program or oontraot 
programo of th e ar e a program may op e nd funds for rooidon 
tial faoilitios for severely mentally ill adults for the follow 
tagt 

(4) staffing; 

(3) to rent or lease rooid e ntiol faoilitios; 

(3) furniture or apooializod oquipmont for roaidonts; 

f4) traDsp>ortation of rosidonts; 

(5) other noooooary operating e xp e ns e s as approv e d 

by the Division; and 

(6) repair s and — maintenanco — of facilities which 

roproQont normal upkeep and do not materially 
increooe tho valuo of th e facility or ext e nd its 
us e ful lif e . 
(o) Funds for residential facilities for sovoroly mentally ill 
adults may bo used for tho purchaoo, construction, alter 
ation, improvem e nt or repair of a r e sid e ntial facility by th e 
area program or a non profit board und e r contract with th e 
aroa program with division approval. — Tho program shall 
meet tho requirements of tho following: 

fi^ In ord e r to participat e in a F e deral D e partm e nt 

of Housing and Urban Developm e nt (HUD) 
Section 202 proj e ct (12 U.S.C. § 1701g) for tho 
purchase, construction or alteration, improve 
ment or repair of a faoility^, th e program shall 
moot tho following r e quir e m e nts: 
(A) — Tho area program may request funds for this 
project from tho division. — Tho Division may 
participat e in HUD Sootion 202 proj e ct contin 
g e nt upon th e availability of stat e funds. 

(B) TTio area program shall sign a legally binding 

contract with a private non profit agency to 
6p) e o i f)' that if th e facility o e oD e o to b e us e d in 
th e d e liv e ry of oor i 'iooo to th e clients, — the 
private non profit agency shall reimburse tho 
Division according to tho following require 



1469 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



monto ! 

(i) If th e faoilit>f is sold, it should b e oold at 

tbo ourront fair morkot value ao dotorminod 
by two indopondont upproiaala aocoptablo 
to tho Division, and tho Division shall bo 
roimburo e d a pro rata shor e of th e s e lling 
prioo of tho faoilit)' bas e d on th e oontribu 
tion mado by tho Division in tho purchase, 
oonotruction or alteration, improvomont or 
ropair of th e faoilit)'. 

(ii^ If the faoilit)' is r e tain e d by tho privat e 

non profit agoncy, tho Division shall bo 
fe mbursod a pro rata sharo of tho current 
fair mark e t valu e of th e facility as det e r 
min e d — by — twe — indep e nd e nt — appraisals 
accoptable to tho Division basod on the 
contribution made by tho Division in the 
purohaso, oonotruction or alt e ration, im 
provomont or repair of th e faoilit)'. 
(€^ — Tho aroa program shall maintain a record 
which rofloots tbo amount of contribution mndo 
by th e state for purchas e , — oonotruction or 
alteration, improv e m e nt or r e pair to th e faoil 

(3) Projocta that involve tho purchase, construction, 

alteration, improv e mont or r e pair of a rooidontial 
facility' with th e e xc e ption of f e d e ral Houoing 
and Urban Dovolopmont (HUD) 202 projects 
shall moot tho requirements of tho following: 
(A) — Th e R e oidontial Faoilit>' Mortgag e Paym e nt 
Program. Th e Division may participat e in th e 
mortgage pwymont program in part or in total 
dependent upon tho availability of state funds. 
(8) — Th e R e sidential Faoilit)' Purchas e /Construction 
Program, 
(i) Tho Division may participate in tho down 
payment or lump s um purchase or con 
stniotion of a r e sid e ntial facility' in whole 
or part conting e nt upon th e availability' of 
state funds. 

(«) Tho aroa program or non profit board shall 

s e cur e tv ^ 'o prop e rty' appraioalo for r e vi e w 
and approval by the Division prior to 
purchase. 
(tii) — If a now construction grant is roquootod, 
th e ar e a program shall submit thr ee con 
stniotion bid contracts from thr ee building 
oontmotorB oxcopt as provided for by G.S. 
1 4 3 132 to tho appropriate regional office 
for r e vi e w and approval prior to construe 
tion bid l e tting. 
f€) — A request for initial renovation of a newly 
acquired residential faoilit)' of five thousand 
doUoro ($5000) or l e se shall bo submitt e d -te 
th e appropriat e r e gional offic e of th e Division 
for approval. Initial minor repairs to facilities 
of lose than one thousand dollars ($1000) shall 



bo approved by tho area program. 
(B^ — A requ e st for alt e ration or improvem e nt of an 
existing reoidontial fooilit)' in e xo e oo of fivo 
thousand dollars ($5000) shall bo foi^'ardod to 
tho Division Director's office through tho 
appropriate regional offic e of tho Division for 
approval. 
A request for alteration or improvomont of an 



m- 



existing — facility' — of fivo — thousand — dollars 
($5,000) or l e ss shall b e submitt e d to the 
appropriate regional offic e for approval. 

(F) Each request as outlined in (o)(2)(B) and (D) 

of this Rule shall bo accompanied by a narra 
tiv e that e xplains tho ne e d for th e purchas e , 



^G)- 



oonotruction, alteration. 



improv e m e nt or repair 



of the facilit)' and a copy of tho schematic 
drawings and specifications. — If approved by 
tho Division of M e ntal H e alth, Montal R e tar 
dation and Substanc e Abuse Sorviooo, thooo 
drawings and spocifioations shall bo forwarded 
to tho Division of Facility Sorviooe for review 
and approval. 
If th e resident i al 



facilit)' io operat e d by a 
non profit board, the area program shall si^ 
a legally binding contract with tho private 
non profit agency — for e ither the mortgage 
paym e nts to b e mad e or tho purohaso or con 
s truction program as indicated in (o)(2)(A) and 
(B) of this Rule. — A copy of tho appropriate 
contract shall bo obtained from the Fiscal 
S e r^'io e o Branch of the control offic e of the 
Division. 
(H) — If a rosidontial — facilit)' owned by an area 
program or its privat e non profit contract 
ag e ncy was purohoo e d, alt e r e d, improved, or 
rehabilitated using division funds and late r 
ceases to bo usod in tho deliver)' of sorvicos to 
cli e nts by th e or e o program or its privat e 
non profit contract agency, th e facility shall b e 
sold at the current fair market value as deter 
mined by tv r 'o indopondont appraisals accept 
able to th e Division. — The Division sholl bo 
r e imburs e d a pro rata shor e of th e proce e ds of 
tho sale based on the porcont of contribution 
mode by tho Division in tho purohaso, alter 
ation, improv e m e nt or rehabilitation. — If an 
ar e a program or its non profit contract pro 
gram wishes to retain a faoilit)' that was pur 
chasod, — altered, — improved or rehabilitated 
using funds for residential faciliti e s for s e 
v e r e ly m e ntally ill adults th e ar e a program or 
its contract program shall pay to the Division 
a pro rata share of tho current fair market 
value of tho faoilit)' as d e t e rmin e d by two 
ind e p e nd e nt appraisals oooeptabl e to th e Divi 
sion basod on contribution made by the Divi 
sion in tho purchase, alteration, improvement 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1470 



PROPOSED RULES 



or rohnbilitation of the faoilit)'. — Thia proviaion 
may bo waivod by th e Divioion Direotor upon 
written roquoot of th e program. — Th e ar e a 
program shall maintain rooofdo on a oontinu 
ous basis v i hich rofloct the amount of contribu 
tion for purohaoo, alteration, improv e m e nt, or 
rehabilitation by the Divioion, area program or 
other funding entity. 

^ Immediately upon rocoipt of said funds or aa 

soon thereaft e r as praotioal, an ar e a program 
or privat e non profit agonoy r e o e iving otat e 
funds pursuant to this Rule shall cause to b e 
recorded with the Register of Deeds of the 
count)' — in whioh the r e sid e ntial — faoilit)' is 
looatod a notioe of olaim in li e u (or oontinuing 
lien as applicable) on behalf of the state for all 
funds provided by the state through the Divi 

(f) Fund balonoe. Th e Division may allow ar e a programfi 
or contract programs to maintain a fund balance of no more 
than 15 percent of the current annual budget in accordance 
V i ith Rule .1125 of this S e ction. 

fg3 — To apply for funds for r e sid e ntial — faoilitios for 
severely mentally ill adults, an annual plan and budget for 
such funds shall be included in the appropriate area pro 
gram's total annual plan and budg e t packag e wh e n it is 
submitt e d to th e appropriat e regional offic e of th e Division. 

(h) Funds for residential facilities for aoveroly mentally ill 
adults shall be allocated among the regions of the Division 
by th e Division Dir e ctor. 

(i) Booed on th e approved annual plan and budget request 
submitted and availability' of funds, allocation of funds for 
residential facilities for severely mentally ill adults to area 
programo within e ach r e gion shall b e made by the Division 
Director or his d e sign ee . 

Statuwry Authority G.S. 122C-1 12(a)(6); 122C-141; 
122C-147; 122C-150; 143B-10. 

.1147 EARLY TNTERVENfTION-FEDERAL- 
EHA 

(a) Th e Division shall administ e r a program of grants to 
area programs call e d Early Int e r i ' e ntion Federal Education 
of the Handicapped Act (EHA). 

(b) Such funds shall be used to provide for the establish 
mont of earl)' inter - ontion & e r > ic <e 6. — Early inten'ention 
s e r i 'ioes shall b e provid e d through homa or c e nt e r bas e d 
models, program consultation or through other specific 
activities specified in P.L. 99 4 57. Section 672(2) (A G). 
which — is — adopt e d — by — r e f e r e nc e — according — te — G.S. 
150B 1 1(0). within the following guid e lin e s: 

f4-) Children served shall be those with developmen 

tal delays or atypical development or those at 
risk for thes e conditions ac d e fmed in 10 NCAC 

(33 Children scr . 'ed shall bo from birth through two 

years of ago. 



(3) Funds shall bo uood to oupploroont and incroaQ & 

th e l e v e l of State and loool fundo for thooo 
children and in no ooc e oupplont ouoh Stat e and 
local fundo. 

(c) To apply for funds for those sor^'ioos, an axmual plan 
and budget for such funds shall bo includ e d in the appropri 
at e ar e a program's total annual plan and budget paokago 
when it is submitted to the regional office of the Division. 

(d) Funds shall be allocated to the regions of the Division 
by the Divioion Dir e ctor. 

(o) Based on the annual plan and budget requ e st cubmitted 
by the area programs and approved by the Division, funds 
will bo made available for reimbursement of oors'ieoe. 

Authority G.S. 122C-1 12(a)(6); 122C-131; 122C-150; 20 
U.S.C. 1471. 

.1148 THOMAS S. COMMUNITY SERVICES 

(a) Funds appropriated to the Division for members of the 
Thomas S. Class as identified in the Thomas S., at al v. 
Britt, formerly Thomas S., et al v. Flaherty lawsuit, shall 
be exjjended only for programs serving Thomas S. Class 
members or for services for those clients who are: 

(1) adults with mental retardation, or who have been 
treated as if they had mental retardation, who 
were admitted to a state psychiatric hospital on 
or after March 22, 1984, and who are included 
on the Division of Mental Health, Developmen- 
tal Disabilities and Substance Abuse Sei^'ices' 
official list of prospective class members includ- 
ing focus class members; or 

(2) adults with mental retardation who: 

(A) have a documented history of State psychiatric 
hospital admission regardless of admission 
date; or 

(B) have never been admitted to a State psychiatric 
hospital but who have a documented history of 
behavior determined to be of danger to self or 
others that results in referrals for inpatient 
psychiatric treatment; and 

(C) without funding support, have good probability 
of being admitted to a State psychiatric hospi- 
tal. Expenditures for services to clients listed 
in Subparagraph (a)(2) of this Rule are limited 
by legislation and require specific approval by 
the Division. 

(b) FVograms operated by an area program or a program 
contracted by the area program or a provider under direct 
contract with the Division to provide may spend funds for 
Thomas S. Services funds for the following: 

(1) facility rental; 

(2) utilities; 

(3) staffing; 

(4) supplies; 

(5) travel; 

(6) rental and purchase of administrative and pro- 
gram equipment according to the following 



1471 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



provisions: 

(A) equipment is defined as purchases costing five 
hundred dollars ($500) or more and having a 
useful life of at least one year; 

(B) all equipment purchased with Thomas S. 
Service funds will be inventoried and identified 
as Thomas S. equipment and must be used for 
Thomas S. services; 

(C) equipment may be held in the name of a con- 
tract provider with the stipulation that if the 
equipment ceases to be used to provide ser- 
vices to Thomas S. clients, ownership reverts 
to the contracting area program who must then 
contact the Division for disposition instruc- 
tions; 

(D) the Division must be notified whenever equip- 
ment purchased with Thomas S. Service funds 
ceases to be used to provide services to 
Thomas S. Clients for 45 consecutive days; 
and 

(E) the disposition of equipment purchased with 
Thomas S. funds requires Division approval; 

(7) administrative cost which can be clearly docu- 
mented as Thomas S. administrative costs 
through direct assignment or Division approved 
cost allocation methodology; 

(8) transportation of clients; 

(9) other program costs; 

(10) in accordance with G.S. 122C-147, the pur- 
chase, construction and alteration, improvement 
or rehabilitation of a facility owned by the area 
program or county for the provision of day /night 
and/or 24 hour services by an area program or 
non-profit contract agency; or mortgage pay- 
ments for private non-profit agencies according 
to the following provisions: provisions of Rule 
■ 1123 of this Section; and 
(A) — prior to th e purohoo e of on e xisting facility, the 
ar e a program or oontraot ag e ncy through th e 
ftfea — program, — sheH — submit — twe — proport>' 
appraisals complotod by lioonsod real oatato 
apprais e rs to tho Division for approval. — A^ 
prov e d funding will b e r e l e as e d by th e Divi 
aion after approval of tho approiaale. 
(B) — application — asd — approval — fef — construction 
funding shall b e mad e in aooordono e with Rul e 
■ 1133 of thio Section (i\rott Montal Health 
Contor Construotion Project); 
(C) a request for renovations, alteration, improve 
mont or rehabilitation of a facility of fiv e 
thousand dollars ($5,000) or mor e shall b e 
fop ^ 'ardod to tho Division Director's Office for 
approval. — Each request shall bo accompanied 
by a narrativ e that e xplains th e need for and 
d e eoription of th e alteration, improv e m e nt or 
repair of tho facility'. — Les s er amounto do not 
require Division approval; and 



(B) — if a facility owned by an area program or its 
non profit oontraot agonoy — was purohoood, 
alt e r e d, — improv e d — ef — r e habilitat e d — using 
Thomas S. Sorvioe funds of five thousand 
dollars ($5,000) or more cooooo to bo used by 
th e ar e a program or its oontraot provider for 
se rvic e s to Tbomofl S. Cli e nts for ' 15 oonooou 
tive days, tho Division shall bo contacted 
immodiatoly for disposition instructio as: — If tho 
Division so dir e oto, tho facility shall b e sold at 
the ourrent fair market value in aooordonoe 
with General Statue 153 A 176 and General 
Statute 160A 266. After tho sole, tho Division 
shall bo roimburood th e Division's pro rata 
share of tho proooods from th e sale based on 
tho percent of contribution made by tho Divi 
si on for tho purchase, alteration, improvement 
or r e habilitation of th e sold facility. If on area 
program or its oontraot provider wishoa to 
maintain — ownership of a faoilit)' — that wua 
purchased, altered, improved, or rehabilitated 
using Thomas S. — S e rvic e — fundo, th e area 
program or non profit oontraot provider may) 
if authorized by tho Division, pay to tho Divi 
sion tho Division's pro rata share of the cur 
rent fair mark e t value of the facility aa d e t e r 
ffiifle d by ts » 'o certifi e d apprais e rs or tv t 'o 
independent appraisals — obtained — through a 
licensed real estate agency. — The contribution 
mad e by all parti e s shall b e maintain e d individ 
ually on a p e rp e tual basis in tho lodger, or 
group of accounts in ' i^ 'hich the details relating 
to the general fixed aasots of tho area program 
or ito non profit oontraot ag e ncy or e main 
toined; and 
(11) except as provided in Paragraph (a) of this 
Rule, Thomas S. Operating funds shall not be 
used to serve other than Thomas S clients. 

(c) Funds provided by the Division for Thomas S. 
services shall not be used to purchase client personal 
possessions or clothing unless: 

(1) a unique situation has been documented; 

(2) this expenditure caimot be covered from another 
source. 

(d) Start-up funds, defined as funding provided to 
estabUsh or prepare a facility or program for the provision 
of services, are required to be settled on an expenditure 
basis, may be provided to an area program or contract 
provider providers, including contract providers under direct 
contract with the Division, in accordance with the following 
provisions: 

(1) Expenditures for start-up may be approved in 
accordance with Paragraph (b) of this Rule with 
the following restrictions: 
(A) vehicles are allowable expenditures if: 

(i) no other method of transf>ortation is avail- 
able; 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1472 



PROPOSED RULES 



(ii) other methods are cost prohibitive; or 
(iii) at least four Thomas S. Clients will re- 
ceive transportation services from the 
vehicle. 
(B) furnishings for residential and day services 
shall be limited to functional items and shall 
not include stereos, video cassette recorders, 
microwaves or similar items unless program- 
matic benefit is established; 

(2) Requests for start-up funds shall be made by the 
area program, or through the area program in 
the case of a contract provider, in whose catch- 
ment area the new program or program compo- 
nent is being established and is not required to 
be client specific; 

(3) Request for start-up funding shall be made in 
writing to the Division Director at least (90) 
days prior to need and shall include a line item 
budget and written justification; and 

(4) Request for start-up funding may include ex- 
penses for normal operations such as staff, 
utilities and rent but is limited and may not 
exceed (60) days; 

(e) Funds provided by the Division to support Thomas S. 
services, except as noted m Paragraph (d) of this Rule, shall 
be discontinued if the program fails to serve any Thomas S. 
cUents for a f>eriod of 45 consecutive days. An extension of 
time is approved in writing by the Division Director. 

(f) Funds shall be awarded to the area program by the 
Division based on need and the availability of funds. The 
annual budget for the programs serving Thomas S. clients 
shall be budgeted in a separate cost center. Such cost 
centers shall include all sources of revenue which support 
the costs of Thomas S. clients. 

(g) Thomas S. Class members, as defmed in Subpara- 
graphs (a) (1) and (2) of this Rule, shall not be excluded 
from participating in programs or services for which they 
are eligible and which are funded from other sources. 

(h) The area program and contract provider shall provide 
financial and cUent data regarding Thomas S. Services to the 
Division according to instructions from the Division. 



a fixed, regular and adequate residence: 

(2) An individual who has a primary residence that 
is: 

(A) a supervised publicly or privately operated 
shelter designed to provide temporary living 
accommodations: or 

(B) a facility that provides a temporary residence 
for individuals who would otherwise be institu- 
tionalized; or 

(C) a public or private place not designated for, or 
ordinarily used as a regular sleeping accommo- 
dation for human beings; 

(3) Homelessness does not include any individual 
imprisoned or otherwise detained under federal 
or state law. 

(c) Eligible adults are individuals who are 18 years of age 
or older and who have long term, severe disabling mental 
illness. Long term severe mental illness is defined as a 
serious and persistent mental or emotional disorder, e.g.. 
schizophrenia, severe depression, manic-depressive disorder, 
etc. that disrupts functional capacities for relationships and 
work or school. Persons with long term mental illness 
complicated by alcohol and or drug abuse problems and 
individuals who are both mentally ill and mentally retarded 
are also eligible recipients. 

(d) Ehgible children are individuals under the age of 18 
who either: 

(1) have an emotional disturbance of such severity 
as to significantly interfere with functioning 
within the family, school or community environ- 
ment and to require intensive intervention by 
mental health or other related agencies: or 

(2) are at high risk of severe emotional disturbance 
because of severe mental illness or substance 
abuse in the immediate family or excessive 
disruption of normal educational and develop- 
mental process: or 

(3) are in addition to mental illness, also suffering 
from an added disability, such as neurological 
impairment, chemical dependency and or mental 
retardation. 



Statutory Authority G.S. 122C-147; 122C-150. 

. 1 149 PATH HOMELESS GRANT 

(a) The Division shall administer a program of grants for 
children and adults to area programs called Path-Homeless 
Grant. 

(b) These funds shall be used to provide comprehensive 
services for homeless individuals who have chronic mental 
illness. Path-Homeless Grant funds shall be used to develop 
community mental health and related services to provide 
treatment and support to homeless mentally iU adults and 
children consistent with the provisions of Public Law 100- 
77. Title VI. Subtitle R, Part C and within the following 
guidelines: 

(1) Homelessness is defined as individuals who lack 



Statutory Authority G.S. 122C-141; 122C-143.1; 122C- 
143.2; 122C-47; 122C- 147.1; 122C- 147.2; Public Law 100- 
77, Title IV, Subtitle B, Part C. 

.1150 GOVERNOR'S SUBSTANCE ABUSE 
PREVENTION PROGRAM 

(a) The Division shall administer a program of grants for 
children and adolescents to area programs called the 
Governor's Substance Abuse Prevention Program. 

£b) These funds shall be used to provide targeted primary 
prevention, services to children and adolescents who are 
high risk for alcohol or other drug abuse. 

(c) Eligible individuals are children who have reached the 
age of five but not 18 years of age who are not currently 
abusing substances but have a primary disability of sub- 



1473 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



stance abuse of Subparagraph (cy2) of this Rule and a level 
of eligibility of Subparagraph (c)(4) of this Rule and have 
one or more of the following high risk factors: 

(1) is a school drop out. 

(2) has experienced repeated failure in school. 

(3) has become pregnant. 

(4) is economically disadvantaged. 

(5) is the child of drug or alcohol abusers. 

(6) is a victim of sexual, physical or psychological 
abuse. 

(7) has committed a violent or delinquent act. 

(8) has experienced mental health problems. 

(9) has attempted suicide. 

(10) has experienced long term physical pain due to 
injury, or 

(11) is a juvenile in a detention facility within the 
state. 

Statutory Authority G.S. 122C-141; 122C-143.1; 122C- 
143.2; 122C-147; 122C-147.1; 122C-147.2; General 
Education Provision Act, Education Department; General 
Administrative Regulations in 34 Code of CFR, Part 74, 
Part 76 and Part 77; and the Drug Free Schools and 
Community Act of 1986 and its amendments. 

.1151 CAROLINA ALTERNATIVES 

(a) The Division may contract with area programs to 
implement a managed care program for mental health and 
substance abuse services for children pursuant to a waiver 
granted by die Secretary of the United States Department of 
Health and Human Services in accordance with Title XD( of 
the Social Security Act, known as the Carolina Alternatives 
program. 

(b) Funding will be made available through monthly 
capitation payments received from the Division of Medical 
Assistance. Capitation receipts to die Division will be based 
on pre-established Universal Capitation Rates and current 
enrollment eligibility information. Division payments to 
area programs will be based upon pre-established area 
program specific capitation rates and current enrollment 
eligibility information. 

(c) Funds are awarded and settled based on the provisjons 
in the contract between the Division and the area program. 

Statutory Authority G.S. 122C-141; 122C-143.1; 122C- 
143.2; 122C-147; 122C-147.1; 122C-147.2; Social Security 
Act, Waiver under Sections 1915(b) and (b)(4). 

.1152 CLOZAPINE 

(a) The Division shall administer a program for the 
reimbursement of area programs for the purchase of the 
drug Clozaril for the treatment of eligible patients suffering 
from schizophrenia. 

(b) Funds shall be used for the reimbursement for 
laboratory services, pharmacy dispensing fees and for the 
price of the drug identified as Clozapine or Clozaril in a 
manner prescribed by the Division. 



(c) Eligible clients are individuals who have a diagnosis 
of schizophrenia and are: 

(1) Medicaid eligible but have a spend down re- 
quirement (Division funds may be used during 
the spend down period and count toward the 
spend requirement): 

(2) not Medicaid eligible but who meet the federal 
poverty threshold: 

(3) discharged from a state psychiatric hospital on 
the drug Clozapine. 

(d) Funds are paid and settled in a manner prescribed by 
the Division Director. 

Statutory Authority G.S. 122C-141; 122C-143.1; 122C- 
143.2; 122C-147; 122C-147.1; 122C-147.2. 

.1153 COMMUNICABLE DISEASE RISK/ 
SERVICES TO INTRAVENOUS 
aV) DRUG USERS 

(a) The EHvision shall administer a program for substance 
abuse services to adolescents or adults who inject controlled 
substances: or have sexual contact with partners who inject 
controlled substances, including methadone: or have tested 
positive for Human Immunodeficiency Virus (HIV). 
Acquired Immune Deficiency Syndrome (AIDS). Hepatitis 
Bi Hepatitis C. sexually transmitted diseases or tuberculosis: 
or who have engaged in high risk behaviors with identified 
substance abusers. 

(b) Funds shall be used for the provision of services in 
accordance with the special conditions in the Memorandum 
of Agreement or Summary of Significant Federal Require- 
ments. 

(c) Funds are awarded, paid and settled in a manner 
prescribed by the Division Director. 

Statutory Authority G.S. 122C-141; 122C-143.1; 122C- 
143.2; 122C-147; 122C-147.1; 122C-147.2. 

.1154 TREATMENT ALTERNATIVES FOR 
WOMEN 

(a) The Division shall administer a program to provide 
comprehensive services to substance abusing pregnant 
women or substance abusing women with dependent 
children. 

(b) Services may include primary medical, prenatal and 
pediatric care immunization, child care, transportation, 
gender specific substance abuse treatment and therapeutic 
intervention for children that address their developmental 
needs. 

(c) Funds shall be used for the provision of services in 
accordance with the special conditions in the Memorandum 
of Agreement or Summary of Significant Federal Require- 
ments. 

(d) Funds are awarded, paid and settled in a manner 
prescribed by the Division Director. 

Statutory Authoruy G.S. 122C-141; 122C-143.1; 12C-143.2; 



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PROPOSED RULES 



122C-147; 122C- 147.1; 122C-147.2. 

.1155 UNIT COST REIMBURSEMENT 
(UCR) CHILD ANfD ADULT 

(a) The Division shall administer a system of reimburse- 
ment of state, federal and other funds to area programs for 
eligible children and adult clients based on the provision of 
eligible mental health, developmental disabilities and 
substance abuse services. These payments exclude those 
services paid for under either the Willie M. or Thomas S^ 
unit cost reimbursement systems. 

(b) This system of funding shall be based on a consis- 
tently applied methodology which includes the following: 

(1) the identification of service expense centers. 

(2) the allocation of allowable costs. 

(3) the determination of expected units of service, 

(4) the calculation of a unit cost reimbursement rate. 

(5) the identification and assignment of revenue 

(6) the reporting of units of service and revenue, 

(7) the reimbursement of flinds. and 

(8) settlement procedures. 

(c) The procedures established for UCR are stated in the 
Pioneer Funding System Operating Manual, Volumes I 
through IV. 

(d) Funds shall be used for the provision of services in 
accordance with the Memorandum of Agreement. 

Statutory Authority G.S. 122C-141; 122C-143.1; 122C- 
143.2: 1 22C- 1 47;' 122C- 147.1; 122C-147.2; 122C-151.1. 

.1156 SUBSTANCE ABUSE PREVENTION 
AND TREATMENT BLOCK GRANT 

(a) TTie Division shall administer a grant program for the 
federal Substance Abuse Prevention and Treatment Block 
Grant which is made available to the Division under the 
authority of Public Law 102-321 Subpart II. 

(b) The appropriate portion of funds in the block grant 
which are made available to the Division for substance 
abuse treatment and prevention services shall be used to 
make grants to eligible programs for the provision of 
comprehensive services. 

(c) To be eligible to receive block grant funds, an area 
program shall provide the following services: 

(1) outpatient services, including specialized outpa- 
tient services for children and adults who have 
substance abuse disorders or who are at risk for 
substance abuse and residents of its service area; 



(2} 
14] 



tl) 



24 hour-a-day emergency care services: 

day treatment or other partial hospitalization 

services; 

screening for patients being considered for 

admission to stale facilities to determine the 

appropriateness of such admission; 

consultation, education, and primary prevention 

services; 



(6) TB screening and referral in accordance with 
federal requirements; and 



(7) Specialized substance abuse services for preg- 
nant and parenting women and adolescents, 
(d) On a statewide basis, block grant funds for alcohol 
and drug services shall be expended in accordance with the 
following: 

(1) At least 35 percent of the funds for alcohol and 
drug services shall be expended for programs 
and activities related to alcoholism and alcohol 
abuse; 

(2) At least 35 percent of the funds for alcohol and 
drug services shall be expended for programs 
and activities relating to drug abuse; 

(3) At least 20 percent of the amount used for 
alcohol and drug abuse services shall be ex- 
pended for primary prevention and early inter- 
vention programs designed to discourage the 
abuse of alcohol, tobacco and other drugs. In 
order to ensure compliance with this require- 
ment, each area program must expend no less 
than 20 percent of its allocation of SAPT-BG 
funds on primary prevention activities as out- 
lined in the Memorandum of Agreement and 
Summary of Significant Federal Requirements: 

(4) The state must spend at least five percent of the 
annual SAPTBG amount to provide outreach 
intervention services for IV Drug Users using 
one of the following three models developed by 
NIDA: 

(A) Standard Intervention Model for Injecting Drug 
Users (NIDA); 

(B) Health Education Model; 

(C) Indigenous Leader Outreach Model: 
(Section 1924 ; Requirements Regarding 
Tuberculosis and Human Immunodeficiency 
Virus) 

(5) Treatment services designed for pregnant women 
and women with dependent children shall be 
increased at a rate not less than five percent for 
FY 1993. The base for FY 1993 shall be the 
FY 1992 alcohol and drug services block grant 
expenditures and State expenditures for pregnant 
women and women with dependent children and 
to this base shall be added the five percent of the 
FY 1993 grant amount for alcohol and drug 
treatment services. For FY 1994. the State shall 
spend five percent more than the FY 1993 total 
expenditure for pregnant women and women 
with dependent children. For grants beyond FY 
1994, the State shall expend no less than the 
amount equal to the amount expended by the 
State for FY 1994. States shall report their 
methods to calculate their base for FY 1992 
expenditures on treatment for pregnant women 
and women with children; 

(Section 1922 Set Aside for Women With De- 
pendent Children) 
The Division shall review expenditures and if the percentage 



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requirements for services and prevention specified in 
Subparagraphs (d)(\^. (D. (3) and (4) of this Rule are not 
met, the Division shall require changes in area program 
expenditure patterns to meet these federally mandated 
requirements. 

(e) Non-Eligible Expenditures Funds shall not be ex- 
pended for any of the following purposes: 

(1) to provide inpatient hospital services, unless a 
physician has certified that the clients primary 
diagnosis is substance abuse, the individual 
cannot be safely treated in a non-hospital setting. 
the daily rate charged does not exceed the rate 
charged by a comparable non-hospital service. 
and the service is medically necessary: 

(2) to make cash payments to clients: 

(3") to purchase or improve land, purchase, construct 
or permanently improve any building or other 
facility, or purchase major medical equipment; 

(4) to satisfy any requirement for the expenditure of 
non-federal funds as a condition for the receipt 
of federal funds; 

(5) to provide assistance to any entity other than a 
public or non-profit private entity; 

(6) to provide individuals with hypodermic needles 
or syringes so that such individuals may use 
illegal drugs; or 

(7) to su pport any individual salary in excess of one 
hundred twenty five thousand dollars 
($125.000). 

£f) The Divisiog Director shall allocate annually funds to 
the area programs. The funds shall be included in the 
Annual Service Plan and Memorandum of Agreement. 

(g) Block grant funds allocated shall be used to su pple- 
ment and increase the level of state, local, and other 
non-federal funds and shall, in no event, su pplant such state, 
local, and other non-federal funds. The Division shall 
monitor compliance by comparing total budgeted revenues 
for tiie current fiscal year with those budgeted for the prior 
fiscal year for each area program exclusive of block grant 
fiinds. If block grant funds are reduced, the area program 
may reduce its participation in a proportionate manner. 

Statutory Authority G.S. 122C-150; P.L. 102-321, Subpart 
11. 

.1157 NON UNIT COST REIMBURSEMENT 

(a) The Division may provide specific purpose funding 
with state, federal or other sources for activities authorized 
by the division and the granting agency and disburse these 
funds on a basis other than unit cost reimbursement. 

(b) Funds shall be expended in accordance with the 
special conditions set forth in the Memorandum of Agree- 
ment between the area program and Division. 

(c) Funds shall be settled on an expenditure basis in 
accordance with Rule .1014 of this Subchapter. 

(d) Non Unit Cost Reimbursement shall be available for 
child, adult and other services. 



(1) Unless more narrowly defined in the allocation 

letter, fimds for children shall be for individuals 

under the age of ^8 years. 
£2) Unless otherwise defined in the allocation letter. 

fiinds for adults shall be for individuals 18 years 

of age and older. 
(3) Funds which cannot be identified for services to 

children or adults shall be considered "other". 

Statutory Authority G.S. 122C-147. 

.1158 TRAUMATIC BRAEV INJURY 

(a) The Division shall administer a program to provide 
periodic, day/night and 24 hour community based services 
to children and adults with traumatic brain injury. 

(b) Eligible recipients are individuals who have a trau- 
matic brain injury resulting fixam a sudden insult to the brain 
caused by external physical force and who have substantial 
functional limitations according to the DP Adult Eligibility 
Screening Inventory. 

(c) Funds shall be used for the provision of services in 
accordance with the allocation letter and any special condi- 
tions in the Memorandum of Agreement or Summary of 
Significant Federal Requirements. 

(d) Funds are awarded and paid in a manner prescribed 
by the Division Director. 

Statutory Authority G.S. 122C-141; 122C-143.1; 122C- 
143.2; 122C-147; 122C-147.1; 122C-147.2. 

.1159 REVOLVING LOAN 

(a) The EHvision may, upon authorization from the Office 
of Budget and Management, make available funds for loans 
to provide for the implementation of new community based 
programs and services. 

(h) Authorization will be based on a minimum of written 
justification explaining the need for the loan: a detailed list 
of expenditures to be incurred; a detailed list of receipts to 
be received and a repayment plan a pproved by the Division. 

(c) Funds shall be used only for expenditures authorized 
by the Division. 

(d) Funds are awarded and paid in a manner prescribed 
by the Division Director. 

Statutory Authority G.S. 122C-141; 122C- 143.1; 122C- 
143.2; 122C-147; 122C-147.1; 122C-147.2. 

.1160 DOMICILLUIY CARE 

(a) The Division shall administer a program of payments 
to area programs for services to clients residing in domicili- 
ary care facilities, excluding DDA group homes. 

(b) Such funds shall be used to make incentive payments 
for Medicaid covered services rendered to Medicaid eligible 
clients in domiciliary care facilities, including outpatient 
treatment (individual and group), evaluation, case consulta- 
tion, day treatment, screening, case management and psycho 
social rehabilitation services to adults. 



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1476 



PROPOSED RULES 



(c) The service must he provided by m area program, or 
under contract to an area program. The staff member 
providing the service must be privileged by the area pro- 
gram to provide the service and documented according to 
Client Service Record manual requirement. 

(d) Eligible clients shall be an adult resident of a licensed 
Familv Care Home or home for the Aged and Medicaid 
eligible. 

(e) Funds are awarded and paid in a manner prescribed 
by the Division Director. 

Statutory Authority G.S. 122C-112; 122C-143.1. 

SUBCHAPTER 14D - POLICIES ON INPATIENT 
AND RELATED SERVICES 

.0006 USE OF DIVISION FUNDS FOR 
INPATIENT SERVICES 

(a) Inpatient funding for the purchase of services from 
local inpatient providers and medical doctors shall meet the 
following requirements: 

(1) Program Requirements 

(A) Tho Divioion may allocat e fundo to Division 
funds may be used by area programs for the 
purchase of community inpatient care with 
local providers. The allooation of ouoh fundo 
shall bo boo e d on th e area program's annual 
plan. All patients to be served under the plan 
shall be accepted as patients of the area pro- 
gram. Such a patient is one who is assigned 
an area program client record number, has a 
master client record card and services rendered 
are documented in a client record in accor- 
dance with are program standards requirements 
in 10 NCAC 18A .0310 and .0311. Area 
authorities shall contract with a local inpatient 
provider accredited by the Joint Commission 
of Accreditation of Hospitals Organization or 
licensed by the Division of Facility Services 
and designated by the Division of Mental 
Health, Developmental Disabilities and Sub- 
stance Abuse Services. 

(^ i\roa authoriti d fl shall oontraot with a looal 

inpatient provider accroditod by tho Joint 
Commission on Accroditfltion of Hospitals 
or lio e na e d by th e Departm e nt of Human 
Rooourooo or Divioion of Facility SoP i 'iooo 
and designated by tho Division of Mental 
Health, Mental Retardation and Subatnnoo 
Abuoo Serviooo. 

^ Each ar e a authority int e r e sted in applying 

for inpatient funds s hall submit a proposal 
for approval to the regional office with 
th e ir annual plan and budg e t. — Inoluded in 
th e proposal shall b e a propos e d oontraot 
botv i 'oen tho area authority and tho local 
inpatient provider. 



(S) — Priorit>' in allocating funds shall bo given to 
thoBo program which: 

(i) hav e e vid e no e d abilit)' to d e or e ai) e admio 

oiona to state regional faoilitioo or which 
propose to dooroaoo admiooiono to state 
regional facilities by proi i 'iding oommunit)' 
inpati e nt o e rvio e o; 

(ti) have a written admiaoion and diochargo 

procedure that mooto tho roquiroments of 
th e division otimdard s for area progrom sr 
(iii) bavo an operational plan to oor^' e indigont 
and/of minority populations; or 

(tv) show a roadinosfl to develop an inpatient 

d e toxification — program for alcohol — emA 
drugs. 
(€) — The number of da)'s required for inpatient 
hospitalization shall not oxoood tho stimdxirds 
00 s e t by PSRQ for appropriat e l e ngth of stay. 
PSRQ reports shall b e mad e availabl e upon 
roquost to tho area programo and for Depart 
mont of Human Rosourcos progrom reviews 
and audits. 
(B) (D) Non-residents of the State of North Caro- 
lina may receive inpatient care under the area 
program inpatient program only under emer- 
gency situations. An emergency situation 
would be where a person needs immediate 
hospitalization which cannot be delayed until 
he is transported to an appropriate inpatient 
facility within his resident state. 
CO (E) An area authority may contract with pri- 
vate psychiatrists or other medical doctors to 
provide professional services in inpatient 
settings. Such contracts shall be in accordance 
with Section 23n and Section 25 .1010 of 
APSM 75-1. act as attending physicians for tho 
local inpatient program when insufficient area 
program e mploy e d phyoioiano ar e available to 
provid e th e r e quir e d oov e rog e . — i\ll oontraoto 
for inpatient sorvicoa by physicians shall bo in 
accordance with Section 23 of Area Program 
Budg e ting — ond Proo e dur e s Manual of th e 
Division (APSM 75 1), adopt e d pursuant to 
G.S. 150B 1 4 (c). 

(D) fF) Part-time consultant medical doctors em- 
ployed by the area program for non-inpatient 
care may also be contracted to provide inpa- 
tient care. The area director shall assure that 
there will not be a conflict, such as dual pay- 
ment, between the part-time physician's em- 
ployment for outpatient care and his or h e r 
participation in the inpatient program. In all 
cases, prior authorization shall bo given by tho 
division v . h e r e th e combin e d dayo of e mploy 
m e nt for consultants exceed two days p e r 
wook. 

(E) fG) For patients treated by the provider, 



1477 



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PROPOSED RULES 



) 



foimburoomont Use of Division funds for 
inpatient services shall be limited to services 
for alcohol and and/or drug detoxification and 
for treatment of emotional disorders. 
(2) Fiscal Requirements: 

(A) A written contract between the area authority 
and the provider and/or ef attending medical 
doctor shall be negotiated and submitted to th e 
division, established in accordance with 10 
NCAC 14C .1010. The contract shall contain, 
at a minimum, provisions which deal with such 
matters as payment for patient; responsibility 
for reimbursement; services to be provided; 
responsibility for patient admission; records; 
statistical information; posting of payments; 
and maintenance of patient care cost. 

(B) — Whore division funds which require local 
matching funds aro uood to oontraot for looal 
inpati e nt oar e , the following oourooo shall b e 
accepted as local matching funds: 

(i) First and third party reimbursement re 

o e iv e d by the inpati e nt facility for oost 
inourr e d for th e treatm e nt of ar e a — pre- 

gram patients; (First and third party 

sorviooB may bo combined from Bovoral 
inpatient faciliti e s within an ar e a whioh ia 
treating ar e a program pati e nts.); and 

(ii) local funds derived by the area program 

and designated for roimbursement to com 
munit)' inpati e nt faciliti e s for th e ooot of 
inpatient treatment (Looal matohable funds 
are those funds appropriated — by local 
govommonts, fees for sor i 'ioos rendered, 
and other non state and non f e d e ral funds). 

(B) (3) Requirement for Inpatient Facilities Reim- 
bursement: 

(i) fA^ Reimbursement to the inpatient pro- 
vider for alcohol and and/or drug detoxifi- 
cation or emotional disorders shall not 
exceed the lesser of the following: 
(I) ^ the difference between any first er 
and/or third party payments or both 
collected and the approved all Inclusive 
prospective medicaid reimbursement 
rate for the provider on an individual 
patient basis; or 
(ID ^ charges for inpatient services. The 
medicaid rate to be reimbursed shall be 
the effective rate at date of discharge. 
The inpatient provider shall follow 
usual collection procedures for each 
patient before billing the area program. 
(ii) (^ A request for reimbursement for inpa- 
tient cost shall be submitted by the pro- 
vider to the area program which will be 
the basis for reimbursement. The area 
progmm shall use a form as proocribod by 



the divi s ion. 
(C) f4) Requirements for Attending Physician 
Reimbursement: 
(i) fA^ Area authorities which elect to con- 
tract with medical doctors for the provi- 
sion of inpatient services shall use one of 
the following two methods to reimburse 
the medical doctor for his his/her services: 
(I) (i) The area program shall pay the 
medical doctor at his medicaid provider 
rate or usual and customary charge 
until a medicaid provider rate is estab- 
lished for all services rendered. Under 
this method, the fte area program 
shall bill all first and third party payors 
for all services rendered and retain all 
receipts. 
(II) (ii) The medical doctor shall bill all 
first and third party payors for the area 
program patient or his inaumnoo oarriof 
or medicare and medicaid fiseal inter 
m e diar^' for all services rend e r e d and if 
th e m e dical doctor io unabl e to ooUoot 
from the patient or his insuronoe oar 
rior or medicare and medicaid fiscal 
intermediary th e rendered. The medi- 
cal doctor shall request reimbursement 
from the area program for any 
unreimbursed care, up to his medicaid 
provider rate. 
(ii) (B) Full-time medical doctors employed by 
the area program may be eligible for 
payment from inpatient funds according to 
the area policy for reimbursement of phy- 
sicians providing on-call, extended duty 
and emergency call-back services. The 
area policy shall be included in the "other 
pay" provisions submitted to the State 
Personnel Director. These provisions are 
in addition to the regular pay plan submit- 
ted and may be submitted separately, 
(b) Tlie area program is not required to make a cost 
settlement with the local inpatient provider for fiscal year 
19 8 2 8 3 and subsequent fiscal years . 

Statutory Authority G.S.122C-J12; 122c-l47; 122c-148. 
****************** 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the Director of the Division of Mental 
Health, Developmental Disabilities and Substance Abuse 
Services proposes to develop rules in accordance with 1995 
Session Laws Chapter 249 on the following subjects related 
to Eligible Assaultive and Violent Children: (1) Determina- 
tion of eligibility and ensuring provision of services for 
eligible and assaultive children pursuant to G.S. 122C- 



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1478 



PROPOSED RULES 



112(a)(14); (2) Prior notice pursuant to G.S. 122C-196; 
and (3) Administrative review by Review Officer pursuant 
to G.S. 122C-199. The agency will subsequently publish in 
the Register the text of the rules it proposes to adopt as a 
result of the public hearing and of any comments received on 
the subject matter. 

Proposed Effective Date: May 1, 1996. 

A Public Hearing will be conducted at 10:00 a.m. on 
November 16. 1995 at the Willie M. Services, 3509 Haworth 
Drive, 3rd Floor Conference Room, Raleigh, NC 27609. 

Reason for Proposed Action: To adopt rules in accor- 
dance with G.S. 122C-]12(a)(14) as set forth in the 1995 
Session Laws Chapter 249 for determining eligibility, 
ensuring the provision of services, and providing for con- 
tested case hearings for eligible assaultive and violent 
children. 

Comment Procedures: Please submit written comments to 
Charlotte F. Tucker, Division of Mental Health, Develop- 
mental Disabilities and Substance Abuse Services 
(DMH/DD/SAS), 325 N. Salisbury Street, Albemarle Bldg. , 
Suite 558, Raleigh, NC 27603-5906, FAX 919-733-8259. 
You may preseru oral or written comments at the November 
16, 1995 public hearing; however, time limits may be 
imposed by the Hearing Officer. The deadline for written 
comments is November 15, 1995. 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the Department of Human Re- 
sources/Division of Medical Assistance intends to amend rule 
cited as 10 NCAC 26K .0006; and adopt rules 10 NCAC 
50D .0101 - .0103. .0201, .0301 - .0302, .0401 - .0402, 
.0501 - .0503. 

Proposed Effective Date: February 1, 1996. 

A Public Hearing will be conducted at 1:30 p.m. on 
December 1, 1995 at the NC Division of Medical Assistance, 
1985 Umstead Drive, Kirby Building, Room 132, Raleigh, 
NC. 

Reason for Proposed Action: 

10 NCAC 26K .0006 - This rule clarifies when a provider 
may bill a patient who is a recipient of Medicaid. 
10 NCAC SOD .0101 - .0103, .0201, .0301 - .0302, .0401 - 
.0402, .0501 - .0503 - These rules are necessary to imple- 
ment Medicaid estate recovery. OBRA 1993 mandated 
estate recovery and enabling state legislation to effect this 
mandate was needed. G.S. 108 A- 70. 5 was passed in July 
1994 and authorizes estate recovery. 

Comment Procedures: Written conwients concerning this 



rule-making action must be submitted by December 1, 1995, 
to Portia Rochelle, APA Coordinator, Division of Medical 
Assistance, 1985 Umstead Drive , Raleigh, NC 27603. Oral 
comments may be presented at the hearing. A fiscal note 
statement is available upon written request from the same 
address. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of local government or state funds. 

CHAPTER 26 - MEDICAL ASSISTANCE 

SUBCHAPTER 26K - TITLE XIX APPEALS 
PROCEDURES 

.0006 PROVIDER BILLING OF PATIENTS 
WHO ARE MEDICAID RECIPIEP«JTS 

(a) Excopt 03 providod for in Paragraph (d) of thi s Rulo, 
providers shall not bill Modiooid rocipienta for any Medicaid 
oovered oeP i 'icx s o provid e d to r e oipi e nta unl e oo tho providor 
has op e oifioolly inform e d the rooipiont and th e r e oipi e nt has 
sf)ocifically undorstood ho will bo charged for tho sor^'icoa. 

fb) — A providor may not bill a Modicaid rooipiont for 
Medicaid o e r . 'io e o for which it r e o e iv e o no r e imburoomont 
from th e state ag e ncy b e oauo e th e provid e r fail e d to follow 
program rogulationa. 

fe3 — A providoF who accopta a pmtiont oa a Modicaid 
pati e nt agre e o to accept M e dicaid paym e nt plus any autho 
riz e d oo paym e nt and third part)' paymopt as ptayment in 
full, oxeopt that a providor may not dony sorvicoo to any 
Medicaid pationt on account of the individual's inability to 
pay tho oo pay amount. 

{4) — Provid e rs may bill th e r e oipient whon thoy or e 65 
yoars of ago or oldor and qualify' for Modicaro bonofits, but 
fail to supply thoir Modicaro numbor as proof of oovorago. 

(a) A provider may refuse to accept a patient as a 
Medicaid patient and bill the patient as a private pay patient 
only if the provider informs the patient that the provider will 
not bill Medicaid for any services but will charge the patient 
for all services provided. 

(b) Acceptance of a patient as a Medicaid patient by a 
provider includes, but is not limited to, entering the patient's 
Medicaid number or card into any sort of patient record or 
general record-keeping system, obtaining other proof of 
Medicaid eligibility, or filing a Medicaid claim for services 
provided to a patient. A patient must request acceptance as 
a Medicaid patient by: 

(1) presenting the patient's Medicaid card or pre- 
senting a Medicaid number either orally or in 
writing; or 

(2) stating either orally or in writing that the patient 
has Medicaid coverage: or 

(3) requesting acceptance of Medicaid upon ap- 
proval of a pending application or a review of 
continuing eligibility. 

(c) Providers may bill a patient accepted as a Medicaid 
patient only in the following simations: 



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PROPOSED RULES 



(1) for allowable co-payments or deductibles as 
specified under 10 NCAC 26C .0003: or 

(2) before the service is provided the provider has 
informed the patient that the patient may be 
billed for a service that is not one covered by 
Medicaid regardless of the type of provider or is 
beyond the limits on Medicaid services as speci- 
fied under 10 NCAC 26B. 10 NCAC 26C. and 
10 NCAC 26D; or 

(3) the patient is 65 years of age or older and 
qualifies for Medicare benefits, but has failed to 
supply a Medicare number as proof of coverage: 
or 

(4) the patient is no longer eligible for Medicaid as 
defined in 10 NCAC 50B. 

(d) When a provider files a Medicaid claim for services 
provided to a Medicaid patient, the provider may not bill the 
Medicaid patient for Medicaid services for which h receives 
no reimbursement from Medicaid when: 

(1) the provider failed to follow program regula- 
tions: or 

(2) the agency denied the claim on the basis of a 
lack of medical necessity: or 

(3) the provider is attempting to bill the Medicaid 
patient beyond the situations stated in Paragraph 
(c) of this Rule. 

(e) A provider who accepts a patient as a Medicaid 
patient agrees to accept Medicaid payment plus any autho- 
rized co-payment and third party payment as payment in full 
for all covered services provided, except that a provider 
may not deny services to any Medicaid patient on account 
of the individual's inability to pay co-payments as specified 
under 10 NCAC 26C .0003. 

(f) When a provider accepts a private patient, bills the 
private patient personally for Medicaid services covered 
under Medicaid for Medicaid recipients, and the patient is 
later found to be retroactively eligible for Medicaid, the 
provider must: 

(1) continue to bill the patient as a private pay 
patient on the condition that the provider follows 
Paragraph (a) of this Rule: or 

(2) accept the patient as a Medicaid patient, bill all 
Medicaid covered services provided the patient 
to Medicaid, and conform to the requirements in 
Paragraphs (a), (h), and (c) of this Rule: or 

(3) if a patient has received and paid for services 
and is then made retroactively eligible for Med- 
icaid, the provider may file for reimbursement 
with Medicaid. Upon receipt of Medicaid 
reimbursement the provider must refund to the 
patient all money paid by the patient for the 
services covered by Medicaid. 

Authority G.S. 108A-25(b); 108A-54; 150B-11; 42 C.F.R. 
447. 15. 

CHAPTER 50 - MEDICAL ASSISTANCE 



SUBCHAPTER SOD - ESTATE RECOVERY 

SECTION .0100 - RECIPIENTS SUBJECT 
TO ESTATE RECOVERY 

.0101 NOTICE OF ESTATE RECOVERY 

(a) An individual who applies or reapplies on or after 
October 1. 1994 under Medicaid disabled or aged categories 
shall be given a written notice at the time of a pplication that 
a claim may be filed against their estate, if one exists, to 
recover Medicaid payments made on his behalf. 

(b) Notice shall be on a form prescribed by the Division 
of Medical Assistance and shall explain: 

OJ The types of Medicaid payments subject to estate 
recovery: and 

(2) That recovery will not be claimed if the individ- 
ual is survived by a legal spouse, childfren) 
under age 21 or blind or disabled child(ren') of 
any age who became blind or disabled before 
age 21 and still live on the property of the 
individual. 

Authority G.S. 108A-70.5; 42 U.S.C. 1396p. 

.0102 PERMANENTLY INSTITUTIONALIZED 

Recovery shall app ly to the estates of individuals under 
age 55 who seek Medicaid coverage for costs of care in a 
medical institution and who cannot reasonably be expected 
to be discharged to return home. 

(1) For purposes of estate recovery, medical institu- 
tion means licensed nursing facilities, intermediate 
care for the mentally retarded facilities, nursing 
facility level of care in hospitals, inpatient care in 
a general or psychiatric hospital or mental institu- 
tion. 

(2) A determination that an individual cannot reason- 
ably be expected to be discharged to return home 
is made when the individual seeks placement in or 
has been admitted to a medical institution using 
the following evidence: 

(a) Admission forms for level of care, physician 
written statement of discharge plans, or plans of 
care which indicate care needs are permanent or 
of indefinite duration, or 

(bl Individual continues to be a resident of a medi- 
cal institution at the end of a temporary stay 
predicted by his physician at the time of admis- 
sion to be no longer than six months in duration. 

(3) Notice of the determination that the individual is 
residing in a medical institution on a permanent or 
indefinite basis shall be given to the individual, or 
to his parent/ guardian/responsible person if the 
individual is incompetent, within three work days 
after the determination. 

(4) The individual or his parent/guardian/responsible 
person may request a reconsideration review of 
the determination under Section .0200 of this 



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1480 



PROPOSED RULES 



Subchapter. 
Authority G.S. 108A-70.5; 42 U.S.C. I396p. 

.0103 AGE 55 AND OVER 

(a) Recovery shall apply to the estates of individuals who 
on or after reaching age 55 seek Medicaid coverage for care 
in a medical institution or under a home and community 
based alternative program for individuals who would 
otherwise qualify for care in a medical institution. 

(Tj) Written notice that the state may file a claim against 
their estate to recover the payments made by the Medicaid 
Program on their behalf shall be given to individuals at the 
time of approval of eligibility for care in a medical institu- 
tion or approval for home and commimity based alternatives 
services. 

Authority G.S. 108A-70.5; 42 U.S.C. 1396p. 

SECTION .0200 - RECONSIDERATION REVIEW 

.0201 RECONSIDERATION REVIEW 

(a) The recipient or his parent/guardian/responsible 
person acting on behalf of the recipient may request recon- 
sideration of the determination that the individual cannot 
reasonably be expected to be discharged to return home 
based on relevant evidence stated in Rule .0101 of this 
Subchapter. 

(b) A reconsideration review shall be requested in writing 
to the Division of Medical Assistance estate recovery 
administrator within 30 calendar days of the determination 
and written notice provided by the county department of 
social services. 

(c) Within 30 calendar days of a written request for 
reconsideration of the determination of permanent institu- 
tionalization, the estate recovery administrator shall establish 
a reconsideration date and conduct a review of: 

(1) All evidence considered by the county depart- 
ment of social services in making a determina- 
tion of permanent institutionalization, and 

(2) Information provided in writing or by telephone 
conference with the recipient or an individual 
acting on behalf of the recipient. 

(d) The review shall be conducted in the Division of 
Medical Assistance offices and may include a telephone 
conference with the recipient or an individual acting on 
behalf of the recipient if oral testimony is requested. 

(e) A decision shall be made and provided in writing to 
the recipient or an individual acting on behalf of the 
recipient within 15 calendar days of the date of the reconsid- 
eration review. 

(f) If the recipient disagrees with the decision of the 
reconsideration review, he may appeal to the Office of 
Administrative Hearings (OAH) within 30 calendar days of 
receipt of the reconsideration review decision. If no appeal 
to OAH is filed, the reconsideration review decision is final. 



Authority G.S. 108A-70.5; 42 U.S.C. 1396p. 

SECTION .0300 - MEDICAID 
PAYMENTS SUBJECT TO RECOVERY 

.0301 PERMANENTLY INSTITUTIONALIZED 

(a) Recovery shall be claimed for all Medicaid payments, 
including cost sharing charges for Medicare services and 
Medicare premiums, made on behalf of individuals for the 
period of time the individual received care in a medical 
institution, whether or not such periods were consecutive. 
The amount of recovery is limited to the amount of Medic- 
aid payments for services and benefits described herein. 

(b) No recovery will be claimed for any period of time 
the recipient was discharged from a medical institution and 
lived in the community for a period of 30 or more consecu- 
tive days. 

(c) No recovery will be claimed if the recipient is 
survived by one or more of the relatives listed in Section 
.0100 of this Subchapter. 

(d) No recovery will be claimed if the Division of 
Medical Assistance determines under provisions of Section 
.0500 of this Subchapter that it is not cost effective or if 
recovery would create undue hardship to a survivor. 

Authority G.S. 108A-70.5; 42 U.S.C. 1396p. 

.0302 AGE 55 and OVER 

(a) Recovery shall be claimed for Medicaid payments for 
the following services and benefits: 

(U Nursing facility level of care; 

Home and community based alternatives ser- 
vices; 



£2} 

m 



Hospital inpatient and outpatient care received 

during approved care under either Subparagraph 

£1} or £2] of this Paragraph; 
£4} Prescription drugs received during approved care 

under either Subparagraph (1) or (2} of this 

Paragraph; and 
(51 Medicare premiums paid during the time of 

approved care under either Subparagraph (1) or 

(2) of this Paragraph. 

(b) The amount of recovery is limited to the amount of 
Medicaid payments and benefits described in Paragraph 
(a)(l)-(5) of this Rule. 

(c) No recovery will be claimed if the recipient is 
survived by one or more relatives listed in Section .0100 of 
this Subchapter. 

(d) No recovery will be claimed if the Division of 
Medical Assistance determines under provisions of Section 
.0500 of this Subchapter that it is not cost effective or if 
recovery would create undue hardship to a survivor. 

Authority G.S. 108A-70.5; 42 U.S.C. 1396p. 

SECTION .0400 - FILING AND COLLECTION 
OF CLAIMS AGAINST ESTATE 



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PROPOSED RULES 



.0401 FILING CLAIM AGAINST ESTATE 

(a) Within 60 days after the date of a recipient's death, 
the Division of Medical Assistance or its Fiscal agent shall 
produce a claim document summarizing all Medicaid 
payments subject to recovery as stated in Rules .0301 and 
■0302 of this Subchapter. 

(b) The claim shall be mailed to ttie county department of 
social services from which the individual received Medicaid. 

(c) Following a determination that the recipient is not 
survived by any of the relatives listed in Section .0100 of 
this Subchapter, the county department of social services 
shall file the claim by certified mail with the individual who 
has been named to administer the estate and shall send a 
copy to the clerk of court for his records. 

(d) If an administrator of the decedent's estate has not 
been appointed at the time the claim is received in the 
county, within 30 calendar days the county shall request the 
name of the administrator from the clerk of court and shall 
file the claim directly with the clerk of court if no a ppoint- 
ment has been made. 

(e) At any time that the county department of social 
services determines that the decedent does not have an 
estate, it shall notify the Division of Medical Assistance to 
cease recovery efforts. 

Authority G.S. W8A-70.5; 42 U.S.C. 1396p. 

.0402 COLLECTION OF CLAIMS 

(a) Estate for purposes of recovery of Medicaid payments 
is defined under G.S. 28A-15-1. 

(b) Unless the Division of Medical Assistance waives or 
reduces its claim, recovery under rules in Section .0500 of 
this Subchapter, recovery shall be claimed in full for the 
amount of the Medicaid claim to die extent that assets in the 
estate are sufficient to meet the state's claim as a fifth class 
creditor. 

(c) All recoveries for Medicaid claims shall be remitted 
to die Division of Medical Assistance by the administrator 
of the decedent's estate, any individual or entity designated 
by the clerk of court or by the clerk of court. 

(d) Amounts recovered shall be shared by the federal, 
state and county governments in proportion to the financial 
share of program costs borne by each at the time recovery 
is received. 

Authority G.S. 108A-70.5; 42 U.S.C. 1396p. 

SECTION .0500 - WAIVER OF RECOVERY 

.0501 RECOVERY NOT COST EFFECTIVE 

Recovery is deemed to not be cost effective and is waived 
when: 
(1) The amount of Medicaid payments for services 

and benefits subject to recovery is less than three 

thousand dollars ($3.000.00). or 
£2} The assets in the estate are below five thousand 



dollars ($5.000.001. 
Authority G.S. 108A-70.5; 42 U.S.C. 1396p. 

.0502 UNDUE HARDSHIP 

(a) Recovery is waived if enforcement of the claim will 
cause undue or substantial hardship to the surviving heirs of 
the decedent. 

(b) Undue or substantial hardship is deemed to exist 
when: 

(n Real or personal property included in the estate 
is the sole source of income for a survivor and 
the net income derived is below 75 percent of 
the federal poverty level for the dependents of 
the survivor(s) claiming hardship, or 
(2) Recovery would result in forced sale of the 
residence of a survivor who lived in the resi- 
dence for at least 12 months immediately prior 
to and on the date of the decedent's death and 
who would be unable to obtain an alternate 
residence because the net income available to the 
survivor and his spouse is below 75 percent of 
the federal poverty level and assets in which the 
survivor or his spouse have an interest are 
valued below twelve thousand dollars 
($12.000.00). 
(c") Undue hardship does not include loss of a pre-existing 
standard of living nor the establishment of a source of 
maintenance that did not exist prior to the decedent's death, 
(d) A claim of undue hardship to a survivor shall be made 
in writing to the Division of Medical Assistance estate 
recovery administrator within 90 days after the Medicaid 
claim has been filed with the administrator or clerk of court. 
The claim of hardship must describe the financial circum- 
stances of the heir and the basis for his dependence on 
assets in 
the decedent's estate. 

Authority G.S. 108A-70.5; 42 U.S.C. 1396p. 

.0503 DETERMINATION OF UNDUE HARDSHIP 

(a) The estate recovery administrator shall evaluate each 
claim of hardship within 60 calendar days of the request to 
make a determination to waive recovery of the claim in part 
or in full. In making this determination, the administrator 
may request documentation to su pport the survivor's claim 
of hardship including prior year's income tax returns, bank 
statements, wage and earnings files, real and personal 
prop>erty records, utility records, tax records, medical bills, 
or other documents offered by the survivor to support his 
claim. 

(b) If documentation necessary to evaluate the claim of 
hardship is not provided or the survivor requests additional 
time to obtain the documentation, the administrator may 
extend the review for an additional 30 days. 

(c) The claim of hardship shall be denied if the necessary 
documentation is not provided within the time frames stated 



10:15 



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1482 



PROPOSED RULES 



in Paragraphs (a) and (h) of this Rule. 

(d) The administrator shall notify in writing the survivor 
claiming hardship, the administrator and the clerk of court 
of his decision within 10 calendar days after completing the 
review of the request and documentation supporting the 
claim of hardship. 

isl If ihs survivor disagrees with the decision, he may 
appeal to the Office of Administrative Hearings (OAH) 
within 30 calendar days of receipt of the decision. If no 
appeal to OAH is filed, the decision is final. 

Authority G.S. 108A-70.5; 42 U.S.C. 1396p. 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the Social Services Commission intends 
to adopt rule cited as 10 NCAC 39D .0304; amend rules 
cited as 10 NCAC 47B .0404 - .0405 and 10 NCAC 49B 
.0102. 

Proposed Effective Date: February 1 , 1996. 

A Public Hearing will be conducted at 10:00 am on 
December 6, 1995 at Albemarle Building, Room 943-2. 325 
N. Salisbury Street, Raleigh, NC 27603. 

Reasons for Proposed Actions: 

10 NCAC39D .0304 - The adoption of this rule will allow 
counties more flexibility in scheduling JOBS participants fl^r 
Work Experience hours above the maximum hours defined in 
45 CFR 250. 63. This will help in meeting the requirements 
of the JOBS program which includes the requirement to meet 
the Standard and AFDC-UP Participation Rates. The 
Altemadve Work Experience Program is expected to have a 
positive impact on the participation rates; this will facilitate 
the receipt of enhanced federal funds. 
10 NCAC 478 .0404 ■ .0405 - During the 1994 Session of 
the General Assembly, Medicaid Coverage for Elderly, 
Blind, and Disabled was passed which mandates that North 
Carolina become a 1634 State for purposes of Medicaid 
coverage for the aged, blind, and disabled. This means that 
those persons who receive Supplemental Security Income 
(SSI) because they are aged, blind, or disabled will automat- 
ically be eligible for Medicaid. The State/County Social 
Assistance to Adults Program (SA) is defined as a State 
supplemental payment program because the program 
basically provides cash supplements to SSI recipients. By 
complying with all the federal rules governing SSI, SA 
recipients remain automatically entitled to Medicaid. SA 
reserve and income policies changed as a result of the 
legislation. Ttierefore, the rules are proposed for amend- 
ment to comply with the changes. 

10 NCAC 498 .0102 - The Department of Health and 
Human Services allows states to choose to provide AFDC for 
18 year old children who are reasonably expeaed to 
graduate from school by the time they are age 19. Prior to 



August 1 , 1995, North Carolina chose this option and has 
provided AFDC for this group of children. During its 1995 
Session, the General Assembly passed legislation to remove 
this option from North Carolina's AFDC Program. There- 
fore, this rule is proposed for amendment to remove the 
provision. 

Comment Procedures: Comments may be presented in 
writing anytime before or at the public hearing or orally at 
the hearing. Time limits for oral remarks may be imposed 
by the Commission Chairman. Any person may request 
copies of these rules by calling or writing to Shamese 
Ransome, Special Assistant, North Carolina Division of 
Social Services, 325 N. Salisbury Street, Raleigh, NC 
27603, 919-733-3055. 

Fiscal Note: 10 NCAC 39D .0304 affects the expenditure 
or distribution of State funds subject to the Elxecutive Budget 
Act, Article 1 of Chapter 143. 10 NCAC 47B .0404 - .0405 
and 10 NCAC 49B .0102 do not affect the expenditures or 
revenues of state or local government funds. 

CHAPTER 39 - EMPLOYMENT PROGRAMS 

SUBCHAPTER 39D - JOB OPPORTUNTTIES AND 
BASIC SKILLS TRAINING (JOBS) PROGRAM 

SECTION .0300 - JOBS PROGRAM COMPONENTS 
AND ACTIVITIES 

.0304 ALTERNATIVE WORK EXPERIENCE 

(a) The Alternative Work Experience Program is unpaid 
job training with clearly defined duties performed at a well- 
supervised public or private non-profit agency or organiza- 
tion. The agency or organization must serve a useful public 
purpose. Participants will gain valuable work experience, 
job skills, attitudes, and habits which will increase their 
employability. 

£b) All JOBS participants are eligible to participate in the 
program. 

(c) JOBS participants shall participate in the Alternative 
Work Experience Program for ug to 30 hours per week and 
shall have no limit on the number of months to participate. 

(d) A wide variety of job training assignments shall be 
used ranging from professional occupations to general labor. 
45 CFR 250.63(lc) is hereby incorporated by reference 
including all subsequent amendments and editions. Copies 
of this Rule may be obtained by contacting the North 
Carolina Division of Social Services. Employment Programs 
Section. 325 North Salisbury Street. Raleigh, North Caro- 
lina. 27603. 919/733-2873. 

Authority G.S. 143B-153; 42 U.S.C. 682(a)(2). 

CHAPTER 47 - STATE/COUNTY SPECIAL 
ASSISTANCE 



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10.15 



PROPOSED RULES 



SUBCHAPTER 47B - ELIGIBILITY 
DETERMINATION 

SECTION .0400 - ELIGIBILITY FACTORS 

.0404 RESERVE 

Eligibility Requirement. 

(1) To dotormino oligibilit)', tho incomo maintonanco 
oofloworkor shall count only rosourooa that are 
ourrontly available to th e applioant or rooipi e nt. 
For applioationB, only thooo rooouro e o that are 
available during any month prior to disfKjsition ore 
counted to dotormino oligibilit)' for those months. 
A reoouroo ohall bo oonoider e d available not only 
when it is actually availabl e but also wh e n th e 
applicant or rocipiont baa a logal intoroot m a 
rooouroo and can mako it available Eligibility 
shall be determined using the reserve rules gov- 
erning the federal Su pplemental Security Income 
Program (SSP. 

(2) Mental Incompetence. 

(A) When a representative alleges that an applicant 
or recipient is mentally incompetent (and the 
allegation can be supported by a physician's 
statement) and does not have a legal representa- 
tive appointed to act in his behalf, the resources 
held solely by the applicant or recipient or held 
jointly shall be excluded in determining count- 
able reserve provided the following two condi- 
tions are met: 

(i) the petition to have an applicant or recipient 
declared incompetent is filed with the court 
within 30 calendar days from the date the 
applicant's or recipient's representative is 
informed of the requirement; and 

(ii) the petition to have a legal guardian appointed 
is filed with the court within 30 calendar days 
of the date the applicant's or recipient's repre- 
sentative is informed of the requirement. 

(B) The county department of social services shall 
petition the court for incompetency and appoint- 
ment of a guardian if: 

(i) the applicant or recipient has no representative 
willing to act in his behalf or the representa- 
tive or guardian refuses to take the required 
action. The county shall petition the court to 
have the applicant or recipient declared incom- 
petent and to have a guardian appointed within 
30 calendar days from the date it learns of the 
representative's refusal; or 

(ii) the applicant's or recipient's representative 
fails to take the required action within 30 
calendar days of the date he was informed of 
the requirement. The county shall within 15 
calendar days from this date, [)etition the court 
to have the applicant or recipient declared 
incompetent and to have a legal guardian 



appointed. 
If the county department of social services is 
required to act under Subparagraph (B)(i) or (ii), 
the resources held solely by the applicant or 
recipient or held jointly shall be excluded in 
determining countable reserve. 

(C) When the court rules that the applicant or recipi- 
ent is competent, his resources shall be counted 
beginning the first day of the month following 
the month he is declared competent. 

(D) When the court declares the applicant or recipi- 
ent incompetent and appoints a guardian, the 
guardian must take appropriate action to dispose 
of or make exempt the resource within 30 
calendar days of his appointment. If he does 
not, the county department of social services 
shall determine if the guardian is acting appro- 
priately under the terms of the guardianship. 

(E) If the guardian takes the appropriate action to 
dispiose of or make exempt the resource, the 
resource shall be excluded until the clerk of 
court confirms the action taken by the guardian. 
The resource, if otherwise includible, shall be 
counted in reserve beginning the first day of the 
month following the month the action is con- 
firmed by the clerk of court. 

^ Th e maximum rooop i 'o allowanc e for a opooiol 
assistonoo applicant/rooipiont shall bo tho Bomo 
amount aa tho Medicaid Aid to tho Agod, Blind, 
and Disabl e d m e dically needy cov e rag e group. 
Th e ooupl e amount shall apply regardleoo of 
wbotbor each spouao qualifies for Special Asois 
tanoo in his own right. — If tho reserve lovol 
e xooodo th e amount ollov ^ 'od for th e number in 
the budg e t unit, th e oaoo is inoligiblo. 
{b) Individuals Whoso Roaorvo is Counted. 
(1) UnlosB tho s pouse is in another aosiotanoo unit, 
his r e s e rv e shall b e counted unl e ss th e oouplo is 
s e parat e d or divoroed. — If th e spous e is in on 
other assistanoo — unit, — only tho applicant or 
recipient's share shall bo counted. 

(3) Jointly Own e d R e souroos. 

fA) — If a budget unit memb e r ov i Tio resourc e s jointly 
with another public assi s tance rocipiont, his 
share shall bo counted as an available re 
souTo e . Tho rosouroo shall be divid e d e qually 
unl e ss tho ov ^ 'noro have a signed agr ee ment 
spocilying division. 
(B) If a budget unit member owns rooourooa jointly 
with a non assistance r e cipient, and ho can 
dispose of tho rosouroo v ^ 'ithout tho consent of 
the other ov i nor, his share shall bo counted as 
on available resource. 
(G) — If a budget unit memb e r ov ^ tis r e sourc e s jointly 
with a non aooiotano e rocipiont, and h e cannot 
dispose of tho resource without tho consent of 
tho othor ov . Tior it shall bo determined whether 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1484 



PROPOSED RULES 



tho non aoaioUmoQ rooipiont oonoonto to tho 
diopooal of the rooouroo. 

(t) If ho oona e nto, th e budget unit m e mb e r's 

s haro of tho reoourco shall bo oountod. 

ftt) If ho rofusos, the budget unit member's 

shar e Ghaii not b e count e d. 
^ — Group I — rooep . ' e itoma count e d: 
fH cash on hand; 



(3)- 



(4^ 



(5)- 



(^ 






the curront balance of savings accounts; 
that portion of a ohooking aooount oth e r than th e 
monthly incom e d e posit e d to m e et th e family's 
needs; 

oaoh value of life insurance policies whon tho 
total fac e valu e of all polioi e o that aooruo oaoh 
valu e e xooedfl on e thouoond fiv e hundr e d dollars 
($1,500); 

equity — ft«t — valu e — less — encumbrances) — m 
non e ss e ntial motor vehiol e o; 
equity (tax value l e oo e noumbranooo) in e xo e oo of 
one thousand dollars ($1.CKX)) in an essential 
motor vehicle. — The vehicle mu s t bo noodod by 
a family m e mb e r to: 
— obtain med i cal tr e atm e nt. 



^B)- 



obtain or retain employment, 

transport — handicapped — family — members — as 

noodod, or 

go shopping; 



^f^^ — — atockfl, bonds, mutual fund shares, certificatoo of 
deposit and other liquid assets; 
promis s or)' not e o, i f salab le ; 






{Wf 



m^ 



r e vocabl e — trust — funds (revocable — means — the 
budget unit member has access to tho trust); 
net procoodfl from a business, including a fam ^ 
which has boon discontinued; and 
equity (tax value less encumbrances) in real 
property not used as a homo or producing an 



(d) Group I — r e s e p i ' e it e m s e xclud e d: 

f4^ persona l e ff e cts and hous e hold goods; 

(3^ personal prof>erty including but not limited to: 

{A) — a mobile homo u s ed as a. homosite; 

fB) — a motorized mobil e hom e ; 

(C) boats and trailers; 

(-&) — campers; and 

(E) — farm or business equipment; 

(5^ equity (tax va l ue leoo encumbrances) — of one 

thousand dollar s ($1,000) or l e ss in an e ssential 
motor vehicle; 

f4) income producing property; — Only that portion 

of th e property which is us e d to produce on 
income shall b e e xclud e d; — Th e prop e rty shall 
continue to bo exc l uded whon it produces no 
income because of factors beyond tho recipient's 
control; 
(5) t e rm l i f e insurance; 



(6^ burial insurance and pro paid burial contracts; 

f?^ th e cosh value of life insurance policies whon the 



total face value of all polioioe that aooruo ooah 
valu e do e s not exc ee d on e thousand fiv e hundr e d 
dollar s ($1,500); 

(^ relocation oasistanoo paymonto roooivod undof 

Titlo XX of tho Uniform Relocation Asaistonco 
and R e al Prop e rty' Acquisition Polioieo Act of 

(9) that portion of tho monthly income deposited in 

a chocking account to moot the family's needs; 

(40) r e al prop e rty us e d as a hom e wh e n th e r e oipi 

e nt's p e rsonal b e longings r e main in th e hom e 
and he continues to state his intent to return or 
his dopondonts live in tho home; — Limited to a 
hous e plus contiguou s property with tax valu e of 
tw e lv e thousand dollars ($12,000) or leoo; 

(4+) life estate or remainder intoroots; 

(43) heir pro[>erty; — Heir property i s a descendant' s 

undivid e d int e root in real prop e rty owned in 
common with other deooondanto; and 

(4-3) value of burial plots. 

(o) Group II — rooerve items counted: 

(4) cash on hand; 

(3) th e curr e nt balanc e of s avings accounts; 

(3) that portion of a chocking account other than tho 

monthly income deposited to moot tho family's 
needs; 

f4) cash value of lifo insuranc e polioi e o wh e n th e 

total faoo value of all policies that accrue oaoh 
value exceeds one thousand five hundred dollars 
($1,500); 

(5) tax valu e of non eoo e ntial — p e roonal property 

limited to: 
(A) — tax value in excess of ono thousand two hun 
dred dollars ($1,200) in all motor vehicl e s 
e xc e pt for Paragraph (0 of this Rul e ; 
(B) — a mobile homo not used as a homesito; 
(C) boats, boat trailers, and boat motors; 
(©) — camp e rs; 
(^ — farm or buoinooo equipment which is not us e d 

to produce on income; and 
(F) — motorized mobile homos; 

(4) tax valu e of incom e producing personal pro[> e rty 

wh e n e quit)' is in exoeoo of six thousand dollars 
($6,000); 

f?) tax valu e of income producing personal property' 

which dooo not yi el d u n e t annual income of at 
least six p e rc e nt of th e property's equity; 

(8) tax value of income producing real property not 

used as a homo when tho equity is in excess of 
six thousand dollars ($6,000); 

(9) tax valu e of incom e producing r e al prop e rty not 

used as a homo which doos not yield a net 
annual income of at least six percent of the 
prop e rty's e quity; 

(40) tax valu e of r e al prop e rty not us e d as a hom e 

[limited to house and contiguous land with tax 
value of twelve thousand dollars ($12,000) or 



1485 



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10:15 



PROPOSED RULES 



(44^ Btooko, bondfl, mutual fiind ohor e o, o e rtifioateo of 

d e posit and other liquid aoDotn; 
promigooo' notoo, if solablo; 



(43) rovooablo tniot fundo (rovooablo — moanB the 

budg e t unit member haa aooooo to th e trust); 

(i-4) valu e of pro paid revooablo burial oontraoto; 

(45) not proooodo from a buslnoas, including a far ay 

which baa boon discontinued; 

lif e e state intoroot, if salabl e ; 

r e maind e r int e r e st, if salabl e ; and 



(44)- 
(4^ 



(48) amount of rovorao mortgage remaining in t he 

month following the month of roooipt. 
(f) Group n — r e o e r^' e itomn oxolud e d: 

(4) personal eff e cts and houoohold goods; 

(3) mobile homo used as a homosito; 

one essential motor vohiolo of any value which 



m- 



(A) — ep e oially e quipp e d for use by a handicapp e d 

individmil; or 
(B) — used to obtain medical treatment; of 
(^ — us e d to obtain or retain e mploym e nt; 

(4) tax value of on e thousand tv t 'o hundred dollaro 

($1,200) or loss from the value of othe r motof 
vehicles; 



(Sh 






(**^ 



incom e producing p e rsonal prop e rty' wh e n th e 



equit)' does not exoeod six thousand dollaro 
($6,000); 

(6) income producing property' when the annual 

yi e ld io at l e ast six poroont of th e e quity; 

(7) real prop e rty uo e d as a home [limit e d to u hous e 
and contiguous land with tax value of tv > 'olvo 
thousand dollars ($12,000) or los s ]. The appli 
oant or r e cipi e nt must hav e a writt e n stat e m e nt 
from a physician indicating that h e is to r e turn 
homo within six months from the date of entry 
into the facility or hla spouse and/or dopondont 
children remain in th e hom e ; 
t e rm lif e insurance; 



burial Insurance; 

the cash value of life Influranoe policies whon the 

total face valu e of all polici e s that aooruo cash 

valu e do e s not exoeod on e thouflond fiv e hundr e d 

dollars ($1,500); 

relocation assistance payments reoeived under 

Titl e XX of th e Uniform R e location Asoiotanoo 

and Real Prop e rty Acquisition Polioi e o Act of 

49Wt 

(43) that portion of the monthly income that is dopos 

ited in a ch e cking account to moot th e fami ly^ 

non solablo lifo ostato; 



(44) non salable remainder Intoroot; 

(45) h e ir property (heir prop e rty' is a desoendan t^ 

undivid e d int e r e st in r e al prop e rty own e d in 
common with other dosoondants) ^- 
valuo of burial plot s ; 



(4?) irrovoottblo burial oontroct; and 

(48) revoroo mortgagee in tho month of roooipt. 

(g) V e rification. — Rooor^'o itomo must b e verifiod and 
documented in the applicant or recipient's oaso record. 

Statutory Authority G.S. 108A-41; 108A-46; 143B-153. 



.0405 INCOME 

(ft) Eligibility Requirement. 



To dotof u iino eligibility' or 



amount of paym e nt Incom e shall be count e d which Is 
actually available to th e applicant or rooipiont and that which 
tho client can legally make available for his support and 
mttintonanoo. Eligibility shall be determined using the 
Income rules governing the federal Su pplemental Security 
Income Program (SSI). 
(b) Con s ideration of Available Income. 

(4) Financial Responsibility of a Spouse. — There is 

spous e for spous e fmanoial responsibilit)' in the 
Sp e cial Assistance program. — Th e r e for e , Income 
that Is available to one spouse is available to the 
other unices they ore separated or divorced. 
Only — th e oontributions — from a — spous e — ef 
ex spouso are counted if: 
(A) — tho couple is divorced; 
(^ — tho couple seporatod prior to one or both 

e nt e ring a domiciliary car e facility; or 
(G) — after e ntranc e of one or both to a domiciliary 
care facility tho couple state that they do not 
plan to maintain a home together if and whon 
there is a r e turn to private living arrange 

(2) Budget Unit Membership. — Tho budget unit 
includes persons whoso needs and income ore 
count e d In computing th e Sp e cial Assistance 
payment. The unit may bo: 
(A) — individual with no spouoo (only tho countable 
income of tho applicant or recipient shall be 
included)) 
(B) coupl e (th e countabl e incom e of tho applicant 
or recipient and tho spouso shall bo included 
unless the spouso roooivoa oosistanoo In his 
own right. — In that cas e , the spouse's income 
shall b e appli e d to his own n ee ds or prorat e d 
if that i s more advantageous.) 
(€) — Certain Disabled (CD) individual with essential 
person (Tho countabl e incom e of th e applicant 
or rooipiont and tho osoontiol person shall b e 
considorod). 
(3) Base Periods. 



(44)- 



(A) — Continuing Incom e . — Unless tho applicant's or 
r e cipient's — inoom e has changed, — th e base 
period for computing income (except for farm 
income and inoome from self employment) is 
th e second month prior to th e payment month. 
Inoom e r e o e iv e d in th e inoome month shall b e 
added and divided by the number of dates 
paid. — Income shall bo convortod to a gross 



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1486 



PROPOSED RULES 



m- 



monthly amount. 
Changing Inoom e . 



(+^ Dofinition. — Change io defin e d ao on ao 

quired oouroo of incom e , — a continuing 
incroaoo or dooroaso in amount of inoon>o, 
or torminalion of incom e . 

(ii^ Treatment (s ea Paragraph (C) of this Rul e 

lef — farm — income — asd — inoome — from 
self employment): 

^ Full prior months. — If inoom e ohangoo 

during the booe p e riod. — th e inoom e 
received — m — eaeh — month — shaH — be 
counted to dotermino eligibility and 
payment for thoo e montho. — Monthly 
income ohall b e add e d, divided by th e 
number of dates paid, and converted to 
a monthly amount. 

{II) DiepKasition month. — If inoom e ohang e a 

during the month of diopoo i tion. th e 
amount for the portion of the month 
the applicant or recipient has received 
inoom e shall b e add e d and conv e rt e d to 
a monthly amount. — Inoom e shall b e 
recomputed — when — the applicant — ef 
recipient haa rcocivod the new monthly 
amount. 

(ffl) T e rminat e d inoom e . — T e rminat e d in 

come shall not be count e d in a month 
after it haa stopped. — For applications 
only that inoome r e c e iv e d — shall b e 
count e d if inoom e t e rminat e s prior to 
the time of disposition. — For on going 
casos. if income terminates prior to th e 
tim e of disposition. — a suppl e m e ntal 
ohook shall b e requ e st e d. — Inoom e shall 
bo counted in the following month. 



(€) — Fftfffl If 



-ftftd Incom e From 



Self Employment. 

(+) Inoom e to b e disoontinu e d (all oosoo). — H 

the farm operation or business is being 
discontinued, the remaining portion of the 
current year's total n e t inoom e shall b e 
count e d as r e s e r i ' e . 

{«3 Continuing income for applications. 

^ Farm income. If the farm operation is 

to continu e , th e pv e riod for computing 
inoome is from the Sp e cial Aooistano e 
payment effective date until the next 
crop settlement. — The cash remaining 
shall — be — divid e d — by — th« — number — ef 
months in th e p e riod. 

(H) Income from s elf employment. — If the 

business is to continue. — monthly in 
com e shall be calculated on the baoio of 
inoom e r e ceived in th e 12 oal e ndor 
months prior to the payment month or 
the period in svhich the business has 



boon in operation. 

(4ii) ContLPuing inoom e for on going oaceo. 

Th e bas e p e riod for r e oipionto is the 12 
calendar — months — prior — te — tbe — review 
month. — If the rooipiont had inoomo looa 
than 12 cal e ndar montho. income for th e 
numb e r of cal e ndar montho r e c e iv e d shall 
bo counted. 

(4j Dotormination of Countable Income. 

(A) — all oountabl e e arn e d inoom e shall be added 

together) 
(B) — all countable unearned income shall bo added 

together; 
^G) — countable oamod inoom e shall bo add e d to 
oountable unearn e d incom e , 
(c) Unearned Inoomo Counted: 

ft) social security benefits (RSDI); 

(S) SSI bon e fito; 

(3) v e t e rans b e n e fits (VA); 

f4) railroad retirement benefits; 

(5) unemployment insurance (UI); 

(6) Trad e R e adjustm e nt benefits; 

f?) privat e dioabilit)' or un e mploym e nt bonofito; 

(*) Workman's Compensation; 

(9) pensions; 

(10) oontributiono; 

f44) divid e nds from otocko, bondo. other tnv e otmento, 

and inoomo from trust funds; 
Brown Lung bonofito; 



H^ 



(+3) Black Lung b e n e fits; 

(44) Housing and Urban D e volopmont (HUD) S e ction 

8 payments paid directly to the applicant or 

recipient; and 
(44) inoom e from th e spouse of a domiciliary oor e 

r e cipi e nt abov e th e SSI individual benefit or 

above her reasonable needs, 
(d) Unearned Income not Counted: 

(4) rolooation payments; 

(3) the curr e nt SSI individual b e n e fit l e v e l or r e a 

sonablo needs of the spouse when she provides 

convincing evidence that they oxccod the SSI 

b e n e fit l e v e l; 

(3) food given to the hous e hold; 

(4) the value of the coupon allotment received under 

the Food Stamp Program; 
(S) the valu e of the U.S. D e fxirtm e nt of Agricultur e 

donat e d foods (surplus oommod i ti e o); 
i€j benefits received under Title VII, Nutrition 

Program for the Elderly, of the O l der Americans 

Aot of 1965, ao am e nd e d; 
f?) sp e cial on e tim e paym e nts such as e n e rgy or 

weatherization assistance; 
(8) paymontfl made under the Alaska Native Claims 

Settl e ment Act, Public Law 92 203; 
(9) payments to c e rtain Indian tribes ao permitted by 

Public Law 9 4 11 4 ; 
(+0) shelter, util i ties, or household furnishings made 



1487 



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10:15 



PROPOSED RULES 



availablo to an applicant or rocipiont at no cost; 

(44^ food and clothing oontributiono made availabl e 

to an applicant or rooipi e nt at no ooot; 

fiS) that portion of educational loans, grants, or 

scholarships including a paymont under the 
Votorono Educational Aooiotano e Program (G.I. 
Bill), actually uo e d for tuition, room, board, 
books, fees, equipmont, special clothing needs, 
required school insuronoo and child care oorvioo s 
noo e oDory for school att e ndanc e ; 

(4^ loans, grants, or soholarohipo to undorgraduat e o 

from any program administered by the U.S. 
Department of Education; 

fl4) aociBtano e from oth e r ag e noi e e and organizations 

(this inolud e e financial oooiotano e and in kin d 
goods or sop i 'icos rocoivod from a governmental, 
civic or charitable organization as long aa s uch 
aid io for r e habilitation purpoo e o, sp e cial training 
or e ducational opportunitioo and provid e d no 
duplication exists); 

fi5) incentive payments made to an applicant o r 

r e cipi e nt participating in a vocational rehabilita 
tion program as long as a training plan i B-4B 
effect; 

{44) weekly incentive allowance plus any reimburse 

mont for transportation or child cor e oosto mad e 
to trainooo under th e Compr e h e nsive Employ 
mont and Training Act of 1977 (CETA); 

(47) housing improvomonts grants to low income 

famili e s approved by the North Carolina Com 
mission of Indian Affairs or any funds distrib 
uted poT capita to or held in trust for members 
of any Indian tribe under P.L. 92 25 4 , P.L. 
93 131, or P.L. 91 510; 

(+8) Exp e rim e ntal — Housing — Allowanc e — Program 

(EHi\P) paymenta made under Annual Contribu 
tion s Contracts entered into prior to January 1, 
1975, under Section 23 of th e U.S. Housing Act 
of 1937, as amended; 

fW) Title XX funds received to pay for services 

rendered by another individuxxl or agency; 
dioaot e r oooiotanoe; 



(30> 

(^4) HUD S e ction 8 paym e nts when paid to th e 

provider or jointly to the applicant or recipient 
and provider; 

(33) any paym e nt receiv e d und e r Titl e II of th e 

Uniform Relocation Aosiotono e and Real Prop 
OTty Acquisition Policioo Act of 1970; 

(3^) HUD Community Development Block Grant 

funds r e ceived to fmano e th e renovation of a 
privately own e d r e oidonoo; 

(34) reverse mortgages. 

(e) Earned Income Counted: 

(4) wagoo from e mployment, tipo, o e aoonal employ 

ment, babysitting, domestic e mployment, wages 
from Adult Dd'clopmentol Activity Program 
(ADAP) and from sheltered workshops where 






employmont oontinuoG after completion of a 
training program, CETA On the Job Train iflg 
(OJT), CETA Work Exporieno«»> CETA Booio 
Training Allowanoos which when added to 
unemployment benefits oquxil minimum wa ges 
for a 10 hour w ee k. Young Adult Cons e rvation 
Corps und e r CETA (YACC), and paymonto 
made directly to a renal dialysis patient's assis 
tant who i e a rocipiont; 
incom e from room e rs and boarders; 
form income; 



(4) income from self employment; 

(5) income from rental property; and 

(6) suppl e m e ntal paym e nts in e xoeoo of state maxi 

mum rateo for AFDC FC and State Footer Home 
fijnds paid by the count)' to recipients who serve 
as foster parents. 
(f) — Earn e d Income not Counted: 

(1) unpredictabl e income; 

(3) income from supportive services or reimburse 
mont of out of pocket exponses to volunteer s 
s e rving as fost e r grandparents, s e nior h e alth 
aid e s, s e nior oomponions, Sor^'ioo Corps of 
Retired Exooutivee (SCORE), and Active Corps 
of Executives (ACE), and any other program s 
und e r Tales I, II and HI of Public Law 93 113; 



9h 



AFDC FC and State Fo s t e r Hom e paym e nts 



equal to or below the state maximum rates to 
recipients who serve as foster parents; 

(4) inoom e from th e Adult D e v e lopm e ntal Activities 

Program (ADiVP) wh e n th e r e is a w'ritton train 
ing plan in effect; and 

(5) incentive paymonto from the Deportment — ef 

Vocational R e habilitation (VR) wh e n th e r e is a 
written training plan in effect. 
(g) — Verification. — Income items must bo verified and 
documented in the applicant's or recipient's case record. 

(h) Computation of net e arn e d inoom e for on applicant or 
rocipiont of Special Aooiotanc e (Lnoludoo spous e or e oo e ntiol 
porson who receives or will receive CD but does not apply 
to a spouse of a domiciliary care recipient): 

(4) the first sixty five dollars ($65.00) ohall bo 

disr e gard e d; 

(3) impairment related work oxponsos for such items 

aa equipment, prosthooofl, and modicol dovioos 
and work r e lat e d e xp e ns e s for uniforms, tool s , 
materials or unusual transportation costs shall b e 
subtracted; and 

(3) then one half of the remainder shall be disro 

gard e d. 



Statutory Authority G.S. 108A-26; 108A-41; 143B-153. 

CHAPTER 49 - AFDC 

SUBCHAPTER 49B - ELIGIBILITY 
DETERMBSfATION 



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1488 



PROPOSED RULES 



SECTION .0100 - COVERAGE 

.0102 OPTIONAL 

(a^ — Child ago 1 8 . — Assistonco shall bo providod to an 
othorv t 'iso oligiblo child who is ago 18 and not yot 19 and i s 
a full timo otud e nt r e asonably e xp e ct e d to graduat e from a 
program of o e oondary oohool (or th e e quival e nt l e v e l of 
vocational or technical training) boforo roaching ago 19. 

fb) Essential Adult. Assistance may be provided to an 
adult who is essential to the well-being of a member of the 
AFDC budget unit as described in 45 CFR 233.20(a)(2)(vii) 
and this provision is horoby adopted by roferonco under 
G.S. 150B 1 4 (c). which is hereby incorporated by reference 
including all subsequent amendments and editions. Copies 
of this regulation may be obtained from the North Carolina 
Division of Social Services, 325 N. Salisbury St.. Raleigh, 
North Carolina 27603. telephone number (919) 733-3055, 
at a cost of five cents ($.05) per copy. 



do so unless he complies with the following: 

(1) A sign that informs consumers in large bold print 
that a {K)licy or service fee of [amount] will be 
charged, shall be displayed in a prominent place 
so as to be seen and read from any part of the 
office lobby. 

(2) The consumer's consent in writing is obtained 
with tho dato and amount l ihown on a separate 
form each time a policy or service fee is charged. 
The form shall be entitled. "Policy or Service Fee 
Consent" and shall include the date and amount of 
each fee charged. 

(3) A dated receipt for the payment of a policy or 
service fee shall be issued either separately from 
the policy premium receipt or stated separately on 
the receipt issued for the policy premium. 

Statutory Authority G.S. 58-2-40; 58-2-195; 58-33-85 (b). 



Authority G.S. 108A-25; 143B-153; 45 C.F.R. 233.10. 



TITLE 11 - DEPARTMENT OF 
INSURANCE 

Notice is hereby given in accordance with G.S. 
1508-21. 2 that the N.C. Department of Insurance 
intends to amend rules cited as 11 NCAC 4 .0120 - .0124, 
.0421 - .0422, .0429 - .0430. 

Proposed Effective Date: February 1, 1996. 

A Public Hearing will be conduaed at 10:00 a.m. on 
November 28, 1995 at the Dobbs Building, 3rd Floor 
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611. 

Reason for Proposed Action: 

11 NCAC 4 .0120 - .0124 - To make technical corrections. 
11 NCAC 4 .0421 - .0422, .0429 - .0430 - Make clarifying 
changes and remove ambiguous language. 

Comment Procedures: Written comments and questions 
should be directed to Tony Higgins, 430 N. Salisbury Street, 
Raleigh, NC 27611, (919) 733-4935. Oral presentations 
may be made at the public hearing. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of local government or state funds. 

CHAPTER 4 - CONSUMER SERVICES DIVISION 

SECTION .0100 - GENERAL PROVISIONS 

.0120 POLICY OR SERVICE FEES 

An agent, broker, or limited representative who deals 
directly with consumers and who intends to charge a policy 
or service fee in accordance with G.S. 58-33-85(b) shall not 



.0121 PREMIUM PAYMENT RECEIPTS 

All Promium premium payment receipts and copies other 
than thooe ioouod dir e otly by on insur e r, shall be dated and 
contain the printed or stampied name and address of the 
agency or agent, broker, or limited representative, and the 
name of the insurer. Receipts shall be signed by the person 
accepting the payment. 

Statutory Authority G.S. 58-2-40; 58-2-185; 58-2-195. 

.0122 POWER-OF-ATTORNEY 

Except for authorizations given in accordance with G.S. 
58-45-35(a) or G.S. 58-46-15, no insurer, agent, broker, or 
limited representative shall solicit or assume a 
power-of-attomey from a consumer that authorizes the 
agent, broker, or limited representative to sign insur- 
ance-related forms. 

Statutory Authority G.S. 58-2-40; 58-2-195. 

.0123 USE OF SPECinC COMPANY NAME IN 
RESPONSES 

When an insurer makes a written response to an inquiry or 
complaint made by a consumer or the Department, the 
insurer shall identify on its response its mailing address. 
addroflB and official corporate name and NAIC company 
code , or its mailing address, addr e oo and specific corporate 
nam e name, and NAIC company code if the insurer is part 
of a group of companies. 

Statutory Authority G.S. 58-2-40; 58-2-190; 58-3-50; 
58-63-95. 

.0124 INSURANCE COMPANY CONTACT 
PERSONS 

Every insurer shall provide the Department's Consumer 
Services Division with the name, title, address, and tele- 
phone number, including a toll-free number, of a designated 



1489 



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November 1, 1995 



10:15 



PROPOSED RULES 



person to whom any person may send a complaint or 
inquiry. Every insurer shall also provide the Division with 
the company president's name, address, and telephone 
number for the Division's use. Forms will be provided by 
the Division, which shall be completed and returned to the 
Division by every insurer. Every insurer shall compl e te 
complete, have signed by the company president, and file 
with the Division a new form within 15 business days after 
any change in the information on the form. 

Statutory Authority G.S. 58-2-40; 58-2-190; 58-63-65. 

SECTION .0400 - PROPERTY AND LIABILITY 

.0421 HANDLING OF LOSS AND CLAIM 
PAYMENTS 

The commissioner shall consider as prima facie violative 
of G.S. 58-3-100 and 58-63-15(11) failure by an insurer to 
adhere to the following procedures concerning loss and 
claim payments when such failure is so frequent as to 
indicate a general business practice: 

(1) Loss and claim payments shall be mailed or 
otherwise delivered within 10 business days after 
the claim is settled. 

(2) Unless the insured consents, no insurer shall 
deduct from a loss or claim payment made under 
one policy premiums owed by the insured on 
another policy. 

(3) No insurer shall withhold the entire amount of a 
loss or claim payment because the insured owes 
premium or other monies in an amount less than 
the loss or claim payment. 

(4) If a release or full payment of claim is executed 
by a claimant, involving a repair to a motor 
vehicle, it shall not bar the right of the claimant to 
promptly assert a claim for property damages 
unknown to either the claimant or to the insurance 
carrier prior to the repair of the vehicle, which 
damages were directly caused by the accident and 
which damages could not be determined or known 
until after the repair or attempted repair of the 
motor vehicle. Claims asserted within 30 days 
after repair shall be considered promptly asserted. 

(5) If a release or full payment of claim is executed 
by a third party claimant, involving a repair to a 
motor vehicle, it shall not bar the right of the third 
party claimant to promptly assert a claim for 
diminished value, which diminished value was 
directly caused by the accident and which dimin- 
ished value could not be determined or known 
until after the repair or attempted repair of the 
motor vehicle. Claims asserted within 30 days 
after repair for diminished value shall be consid- 
ered promptly asserted. 

(6) Exc e pt in total looo oituationo, th e insurer ohall bo 

liable to the vohiclo owner and othora qa thoir 
legal intoroBt may require, for the full cost of 



repair s — lees — policy — doductiblos, — doprocia 
tion/bottenn e nt and pre looo damag e or oonditionn 
on th e v e hiol e i — In total looo oituationo, to the 
extent of the insurer's payment, the inouror shall 
protect any lionboldor's interest, ao rooordod with 
th e Divioion of Motor V e hioloo, by placing the 
li e nhold e r'o nam e on th e o e ttl e m e nt check or draft 
ao CO payee. 

Statutory Authority G.S. 58-2-40; 58-3-100; 58-63-15. 

Mil CANCELLATION OF INSURANCE 

The Commissioner shall consider an unfair trade practice 
the cancellation by an insurer of any personal lines insur- 
ance policy for which the premium has been paid because 
there is another policy in force for which the premium has 
not been paid. In the case of an open aooount the agent, 
brok e r or producer who hoc e xtend e d credit may roquoot 
oancollation of polici e o b e oauo e of nonpayment of pr e mium. 
However, payments from the insured shall bo applied to 
proper polioio e , — when distinguishable, — and only — those 
polici e s for which th e pr e mium has not boon paid may b e 
canc e ll e d for nonpaym e nt of premium. 

Statutory Authority G.S. 58-2-40; 58-63-40. 

.0429 COMMINGLING 

The accounting records maintained by agents, brokers, and 
limited representatives shall be separate and apart from any 
other business records and demonstrate at all times that 
collected funds due to insurers and return premiums due to 
policyholders are available at all times. 

Statutory Authority G.S. 58-2-40; 58-2-195. 



.0430 PROOF OF MAILING; AUTOMOBILE 
INSURANCE 

As used in G.S. 20 310(0. 58-36-85. "c e rtificat e of 
mailing" "proof of mailing" means a certificate issued by 
and bearing the date stamp of the United States Postal 
Service. 

Statutory Authority G.S. 58-2-40; 58-36-85. 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the N.C. Department of Insurance 
intends to repeal rules cited as 11 NCAC 9 .0101 - .0104. 
.0201 - .0203. 

Proposed Effective Date: February 1, 1996. 

A Public Hearing will be conducted at 10:00 a.m. on 
November 28, 1995 at the Dobbs Building, 3rd Floor 
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1490 



PROPOSED RULES 



Reason for Proposed Action: Rules no longer necessary. 

Conunent Procedures: Written comments and questions 
should be directed to Billy Creel, 430 N. Salisbury Street, 
Raleigh, NC 27611, (919) 733-7434. Oral presentations 
may be made at the public hearing. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of local government or state funds. 

CHAPTER 9 - INVESTIGATIONS DIVISION 

SECTION .0100 - GENERAL PROVISIONS 

.0101 DEFINITIONS 

(ft) — "InvootigationG division" or "the divioion" shall m e an 
the invostigationfl division of the North Carolina Dopartmont 
of Insurance. 

(fe) — All oth e r terms shall be oo d e fined in th e G e n e ral 
Statut e s of North Carolina. 

Statutory Authority G.S. 58-9; 58-9.2. 

.0102 PURPOSE OF DIVISION 

The investigations division of the North Carolina Depart 
mont of Insurance conduota invootigations for the dopartmont 
und e r th e direction of th e Commission e r of Inourono e . — Tbi« 
division is r e sponsibl e for inv e stigations to e nable the 
commissioner to enforoo tho insuroneo laws of the State of 

North Carolina. Tho division receives requests from 

insuranc e oomponi e e. polic e d e partm e nts and other law 
onforoomont agenci e s, tho United States Postal Sop i 'ioo and 
tho Insurance Crime Prevention Institute for tho invoatiga 
tion of fraudulent insuronoo claims occurring throughout the 

Th e inv e stigations division also inv e stigat e s oomplainto 
filed with the Department of Insurance against agents, 
adjust e r s and brokers. 

Each inv e stigator is a sworn law e nforc e m e nt offic e r. 

Statutory Authority G.S. 58-9.2; 58-18. 

.0103 DEPUTY COMMISSIONER 

Th e r e shall b e a D e put)' CommioDionor of th e North 
Carolina Department of Insurance in charge of tho in' i 'eatiga 
tions division whose dutie s shall include, but are not limited 
to th e sup e r » 'ision of all aotivitioo relating to achi e ving tho 
purpose of th e division as stat e d in 11 NCAC 9 .0102. 

Statutory Authority G.S. 58-7.3. 

.0104 DIVISION PERSONNEL 

Division personnel shall include an oasistont chief invosti 
gator, investigators, secretaries, — clerks, and such other 
p e rsonn e l ao may b e n e oeosar)' for th e proper execution of 
th e r e sponsibiliti e s of th e division. 



Statutory Authority G.S. 58-9; 58-9.2. 

SECTION .0200 - INVESTIGATIONS 

.0201 INVESTIGATION OF CRIMES: 
AUTHORITY TO ARREST 

This division has authority to conduct e xaminations vsA 
invoetigations on behalf of tho Commiooionof of Lnouronoo 
and when, in tho opinion of the oommiooioner or tho 
inv e stigator or both, th e r e is suffici e nt e vid e nce to charge 
any p e rson or p e rsons with a oriminol violation of the 
insurance laws, tho commissioner or investigator may arrest 
with warmnt or cause such person or persona to be arrested. 

Statutory Authority G. S. 58-9. 2. 

.0202 INVESTIGATION OF CRIMES: 
PROCEDURES 

(*^ — Typ e s of Inv e stigations. — Typ e s of investigations 
include, but ore not limited to: 

(4^ investigation into allegations of fmudulent activi 

ti e s which may involve fraudul e nt claims ranging 
from a few dollars to many thousands of dollars; 

(3) investigation into allegations pertaining to e m- 

b<»ea l e mont by agonto, brok e rs or other p e rsons. 

(fe) — G e n e ral Proc e dur e s. Inv e stigations into alleged 

criminal violation s require tho obtaining of filoo from. 

among others, — inouran oo — companie s — and agents. The 

inv e stigator is r e quir e d to have a working knowledge of, 
among other things, accounting syst e ms and g e neral busi 
nooo practioog of tho insurance industry. 

The investigator cooperates with local, state and federal 
law e nforc e m e nt agencies, and i s availabl e to testify in all 
administrativ e and criminal proceedings. 

(e) — Crimes Defined in Other Than Insurance Laws. — la 
many instances, crimes which are tho subject of invostiga 
tion by th i s division ar e not defin e d in Chapter 58 of tho 
North Carolina G e n e ral Statut e s and th e inv e stigator must 
make reference to tho criminal laws as set forth in Chapter 
1 4 of the General Statute s as tho samo relate to the invosti 
gation. — In addition, d e cisions of f e d e ral and stat e courts 
may b e us e d during th e cours e of on inv e stigation. 

Statutory Authority G.S. 58-9.2; 58-18. 

.0203 NON-CRIMINAL INVESTIGATIONS 

The — investigations — division conducts, — among other s , 
investigations at the discretion of the Commissioner of 
Insuranc e , e ith e r on hio own motion or upon complain t 
b e ing fil e d by a citiz e n of this state, into all e g e d violations 
of provisions of the insurance laws, which said alleged 
violation may not rise to the dignity of a criminal offense. 
Such inv e stigation s may includ e , but ar e not limit e d to, 
e xamination und e r oath of e x e cutiv e officers or agents of 
insumnoo companies as may bo doomed noooGaory. — Findings 
from such investigations are rof>orted to the oommissionof. 



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10:15 



PROPOSED RULES 



Tho diviaion aloo conducts invo s tigationa at the request of 
th e oommiooionor or hio dooignat e d r e proo e ntativ e which 
may includ e , but not b e limit e d to, th e procur e m e nt of 
information to onttblo tho commis s ioner to enforce the 
insurance laws in inatancoo V i 'hon the department is unable, 
or it would b e improp e r to ooour e information by usual 
methods, ouoh as by telephone or oorr e opondonc e . 

Statutory Authority G. S. 58-9; 58-18. 



Notice is hereby given in accordance with G.S. 
150B-21.2 that the N.C. Department of Insurance 
intends to amend rules cited as 11 NCAC 10 .0105, .1102, 
.1603; repeal rule cited as 11 NCAC 10 . 1103; adopt rules 
cited as 11 NCAC 10 .0605, .1110 - .1111. 

Proposed Effective Date: February 1, 1996. 

A Public Hearing will be conducted at 10:00 a.m. on 
November 28, 1995 at the Dobbs Building, 3rd Floor 
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611. 

Reason for Proposed Action: 

11 NCAC 10 .0105 - Reduces paperwork. 

11 NCAC 10 .1102 - Necessary to comply with statute 

changes. 

11 NCAC 10 .1103 - Rewritten in a new rule. 

11 NCAC 10 .0605, .1110 - Necessary to comply with 

changes made in the statutes during the last session of the 

General Assembly. 

11 NCAC 10 .1111 - Necessary to comply with statute 

changes made during last session of the General Assembly. 

11 NCAC 10 .1603 - Technical and procedural changes. 

Comment Procedures: Written comments and questions 
should be directed to Charles Swindell, 430 N. Salisbury 
Street, Raleigh, NC 27611, (919) 733-3368. Oral presenta- 
tions may be made at the public hearing. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of local government or state funds. 

CHAPTER 10 - PROPERTY AND CASUALTY 
DIVISION 

SECTION .0100 - GENERAL PROVISIONS 

.0105 MANUSCRIPT OR INDIVIDUAL RISK 
FILINGS 

(a) Within 60 days after the inception date of a manu- 
script or individual risk policy, the insurer must submit to 
the Department of Insurance, Property and Casualty Divi- 
sion: 

(1) A full and complete copy of the |>olicy. Any 

form or endorsement not previously filed with 



the Department and approved for use must be 
specifically identified. 

(2) A statement describing how the rates were 
calculated. 

(3) A certification that the rates are not excessive, 
inadequate, nor unfairly discriminatory. 

(4) A statement explaining why a manuscript or 
individual risk filing was needed. 

(5) The appropriate filing fee. 

(b) The Commissioner may require such other informa- 
tion as he deems to be necessary for a review of filings 
made under this Rule. 

(c) All filings made under this Rule must be refiled 
whenever a change occurs in or to the policy or upon the 
renewal date of the policy, whichever occurs first. Continu- 
ous jKilicies are not permitted. 

(d) A copy of the a pproved filing shall be retained by the 
filer in accordance with U NCAC 19 .0002 through \\ 
NCAC 19 .0005. 



Statutory Authority G.S. 
58-43-5. 



58-2-40; 58-6-5; 58-41-50; 



SECTION .0600 - CONSENT TO RATE 

.0605 CONSENT TO RATE AUTO LUBILITY 
COVERAGE 

When consent to rate procedures are used to provide 
motor vehicle liability coverage limits under G.S. 
58-36-30(17). the application to effect consent to rate shall 
also show the higher liability limits required by the excess 
liability insurer. 

Statutory Authority G.S. 58-2-40(1); 58-3&30(b). 

SECTION .1100 - RATE FILINGS 

.1102 APPLICABILITY 

The followings Subparagraphs indicate which Rules of this 
Section apply to a particular filing. Note that all rate filings 
must be submitted separately and under independent cover 
from form filings. 

(1) Rule .1103 .1111 applies to all workers' compen- 
sation insurance rate filings made by the North 
Carolina Rate Bureau. 

(2) Rule . 1 104 applies to all nonfleet private passen- 
ger automobile insurance rate filings made by the 
North Carolina Rate Bureau or the North Carolina 
Reinsurance Facility. 

(3) Rule . 1 105 applies to all rate filings made by the 
North Carolina Rate Bureau other than those 
involving workers' compensation insurance or 
nonfleet private passenger automobile insurance. 

(4) Rule . 1 106 applies to all filings for deviations 
fixim the rates of the North Carolina Rate Bureau. 

(5) Rule .1107 applies to all rate filings (including 
those filings derived from filings of licensed rating 



10:15 



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1492 



PROPOSED RULES 



organizations), other than those involving: 

(a) Lines of insurance under the jurisdiction of the (c) 
North Carolina Rate Bureau. 

(b) Nonfleet private passenger automobile insurance 
rates for the North Carolina Reinsurance Facil- 
ity, (d) 

(6) Rule .1108 applies to all rate filings described in 
Subparagraph (5) of this Rule that meet either or 

both of the following criteria: (e) 

(a) A filing for a coverage that involves an increase 
in one year greater than ten percent or a de- 
crease greater than 20 percent. 

(b) A filing for a coverage by a company whose (f) 
market share is greater than ten percent. 

(7) In Subparagraph (6) coverage shall mean one of 
the following: 

(a) Accountants' professional liability; (11) 

(b) Architects" and engineers' professional liability; 

(c) Child care liability (other than such coverage (a) 
sold incidental to another coverage, e.g., in 
homeowners' or commercial multiperil policies); 

(d) Dentists" professional liability; (b) 

(e) Directors', officers', and trustees' liability; 

(f) Errors and omissions liability; (12) 

(g) Hospital premises liability; 
(h) Hospital professional liability; 
(i) Lawyers' professional liability; 

(j) Liquor law liability; (a) 

(k) Municipal liability; 

(1) Nurses' professional liability; (b) 

(m) Owners', landlords', and tenants' liability; 
(n) Physicians' and surgeons' professional liability; 
(o) Police professional liability; (c) 

(p) Pollution and environmental impairment liability; 
(q) Products and completed operations liability; 
(r) Public official liability; 

(s) Public school liability; (13) 

(t) Recreational liability; 
(u) Other health care specialities' professional 

liability; 
(v) If not one of Subparagraphs (6)(a) through (6)(u) 

of this Rule, one of the lines listed on Page 14 (14) 

of the Annual Statement. 

(8) Rule . 1 109 applies to all licensed rating organiza- 
tions participating in a filing made by the North 
Carolina Rate Bureau or the North Carolina 
Reinsurance Facility. 

(9) Rate filings are not required for the following 
lines of insurance: 

(a) Aviation physical damage; 
fb) Mortgage guaranty; 
(c) Ocean marine. 

(10) Rate filings are not required for the following (15) 
types of policies: 

(a) Those written pursuant to the Surplus Lines Act; 

(b) Those written under the Fair Access to Insur- 
ance Requirements (FAIR) Plan that include 



coverages other than crime insurance; 
Those written by the North Carolina Insurance 
Underwriting Association (the Beach Plan) that 
include coverages other than windstorm and hail 
only or crime insurance; 

Those written in North Carolina covering 
multistate insureds except in respect to coverages 
applicable to North Carolina locations; 
Those written by a town or county farmers' 
mutual fire insurance association restricting its 
operations to not more than six adjacent counties 
in this State; 

Those that contain assessment provisions and 
that are written by domestic insurance compa- 
nies, associations, orders, or fraternal benefit 
societies that are not reciprocals. 
All inland marine manual rates and rating plans 
must be filed. 
This Subparagraph applies to the manual rates 
and rating plans of both companies and rating 
organizations. 

Rates and rating plans that are not contained in 
or derived from a manual need not be filed. 
Rate filings are required for all rates whether 
advisory, suggested, or manual, except for those 
lines, policies, and rates specifically excluded in 
Subparagraphs (9), (10), and (11) of this Rule. 
Rates applicable to only one particular risk must 
be filed. 

Rates may be filed either as manual rates or as 
ranges of rates from which the rates for individ- 
ual Insureds are determined. 
Rates based on loss cost filings must be filed in 
accordance with all the requirements of Rules 
.1107 and .1108 including the one that requires 
a comparison of current and proposed rates. 
Rules .1107 and .1108 also apply to loss cost 
filings. In cases where a rating organization files 
prospective loss costs, the same requirements as 
for rate filings apply, with the exception of those 
dealing with expense and profit provisions. 
The rates contained in all filings approved prior to 
January 1, 1990, other than those made by the 
North Carolina Rate Bureau or the North Carolina 
Reinsurance Facility, shall have an expiration date 
of January 1, 1992. Such rates may, subject to 
the Department's approval, be automatically 
renewed by a letter to the Department, specifying 
the Department's file number and the original 
approval date. Thereafter, they remain in effect 
until superseded, withdrawn, or modified by a 
subsequent filing. 

Loss costs, rates, or multipliers for workers' 
compensation and employers' liability that are 
based upon prospective loss costs filings of the 
North Carolina Rate Bureau shall be submitted in 
accordance with Rule . 1 1 10 of this Section. 



1493 



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10:15 



PROPOSED RULES 



Statutory Authority G.S. 58-2-40; 58-36-15; 58-36-30; 
58-36-100; 58-40-30; 58-40-40; 58-41-50; 58-45-35; 
58-46-15. 



.1103 WORKERS' COMPENSATION 

The informntion r e quir e d by N.C.G.S. 5 8 36 15(h) ohall 
bo proGont e d ao foUowo: 

Note! If data required by thio Rule ore not ourr e ntly b e ing 
coUootod or roportod, or arc not currontly readily available 
to insurers, influroro shall commonco proopoctivoly ooUecting 
or reporting ouoh data b e ginning Januaiy 1, 1992. If c e rtain 
data are not r e gularly ooU e oted through th e Btatistioal plan, 
a opocial oall for ouoh data to companioa whoso aggregate 
workers' — componaation — written — premium — ie — at — l«ast 
throe fourtho of th e North Carolina pr e mium may b e 

substitut e d. Thoroafter, — ouoh r e quir e d data that hav e 

accrued shall bo included in each filing until enough data are 
available to fully satisfy this Rule. If in addition to the full 
yoaro of data sp e oifiod in thio Rul e , more r e oent data of looo 
than a full y e ar are availabl e , — such data ohall also b e 
provided. — If updates to the information spocifiod in this 
Rule booomo available before tho olooo of ovidenoo relating 
to the filing, th e y shall also be provided. 

(4^ North Carolina e arned premiumo at th e actual and 

current rate level ; — losses and loss adjustment 
oxf>on908, each on paid and incurred bases without 
trending or other modification for th e e xp e ri e no e 
period, including tho looo ratio anticipat e d at th e 
time the rates were promulgated for the oKporience 
period! 
(a) Includ e promiutB ; — looo, — and looo adjuotm e nt 



^ 



(e) If any identifiable group of polioioo io oxoludod 

from th e calculation of claaoification difforon 
tialo, — d e oorib e — thoo e polioieo, — indicate thoir 
market shore, and provide an explanation for 
their exoluoion. 

(d) Cl e arly deooribe all adjuotmonts to pr e miums, 

looooo, looo adjuotment e xpenooo, e xp e no e o, and 
exposures included in the filing. — Show tho 
unadjusted amounts to which adju s tments wore 
^ made, identify' tho opooific adjuotm e nto, provide 
d e tails on th e d e rivation and application of th e 
adjustment factor s , and de s cribe all intermedi ate- 
oaloulationo. — Whore identical adjustnfHMito are 
appli e d to a set of similar data, an e xample of 
one of th e s e adjuotm e nto io ouffioiont. 

(p) Include actual earned premiums and calculate 

earned premiums at present rates. — iMoo indicate 
how ouoh oaloulationo w e r e produc e d, supply 
supporting docum e ntation for a oampl e of ouoh 
calculations, and justify any aggregate factors 

i() Eotimate th e amount of pr e mium coll e cted from 

e xpense constants. — Provide this premium in 
dollars, as a peroontago of tho standiird earned 
premium, and as a peroontage of net earned 
pr e mium ; — If th e p e rc e ntage of pr e mium ool 
looted in thio mann e r io e xf>eoted to chang e , 
e s timate the extent of tho change and provide tho 
details of this calculation. 

(g) Eotimat e th e amount of additional pr e miu m 

coll e cted b e oauoo of tho minimum pr e mium rul e . 



inoiuo e premium ; — looo, — ana looo aojuotm e nt coii e otoa o e oauoo or mo mmunum pr e mium rul e . 

e xp e no e data from all compani e s writing North Provide this pr e mium in dollars, as a percentage 

Carolina workers' oomDenaation insurance. — Ia of standard earned premium, and na a ooroontngo 



Carolina workers' compensation insurance. — la 
addition, if exposures are used in the calculation 
of pr e miumo at prooont ratoo, provid e all avail 
abl e e xposure data from theoo oompanieo. — If th e 
oxpori e noo of any company that writes more 
than one percent of tho North Carolina worker s ' 
oompenoation writt e n pr e mium has boon e x 
elud e d from any rat e l e v e l) tr e nd, looo d e v e lop 
mont, or investment income calculations, idon 
tify tho company and its market share and 
provide an e xplanation for ito exclusion. — Also 
e otimat e th e aggregat e mark e t s har e of oth e r 
oomponios whoso oxperionce is excluded from 
such calculation s . 

Includ e e xpans e data from all oompani e o writing 
North Carolina work e rs' oompenoation insur 
ance. If the oxperienoo of any of the 50 largest 
(based on written premium) countr)'wide writer s 
of work e rs' oomp e noation insuranc e is e xclud e d 
from any e xji e no e l e v e l calculation, id e ntify th e 
company and its market share and provide an 
explanation for its exclusion. — Also estimat e th e 
aggr e gat e — market share — of other oompani e o 
whos e e xp e rienoo io e xcluded from such oaloula 
tion s . 



of standard oomod premium, and as a porcontage 
of n e t e arned premium. — If th e p e rc e ntag e of 
premium ooU e oted in thio mann e r io e xp e ct e d to 
change, ostimato tho extent of tho change and 
provide tho details of thio calculation. 

(b) Provid e th e lat e st available written and e arn e d 

premiums and mark e t ohor e o for tho ten lorg e ot 
writers of North Carolina workers' oomponsa 
tion insurance. 

(i^ Provid e oompooite looo and premium information 

from e ach of th e latoot two Annual Stat e m e nts 
for which aggregate data are available for the 50 
largest writers of North Carolina workers' 
oomp e noation inouronoo, including th e following: 
(i) — Underv i 'riting and Inv e otm e nt Exhibit, Part 2, 

Lino 16; 
(«) — Underwriting and Investment Exhibit, Part 3, 

Lin e 16; 
(iii) — North Carolina Pag e H, Lin e 16. 

(j) Provide to tho extent possible tho following 

information on companies deviating from the 
work e rs' oomp e noation rat e s of th e North Caro 
Una Rate Bureau for e ach of tho latoot fiv e 
available calendar years: 
(i) — A li s t of all deviating companies; 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1494 



PROPOSED RULES 



(ii) — The ootimntod totxU otoncktrd promium written 

at doviatod ratoo; 
(iii^ — Tho e stimat e d p e ro e ntag e of tho e ntir e otat e 
wide standard premium writton at doviatod 
rates; 
(iv^ — h e total amount of d e viations in doUaro; 
fv^ — Th e av e rage poroontago deviation for d e viating 

companioo; 
fv4) — Tho avomgo poroontago deviation for all com 
panioo. 

fit) Provid e to th e e xtont poosiblo tho following 

information on companie s issuing dividends on 
North Carolina workers' oomponootion polioioo 
for each of th e latoot five cal e ndar years: 
(i) — A Hot of all oompanios issuing divid e nds: 
(ii) — Tho estimated total promium of oompanio s 

issuing dividends: 
(iii) — Tho estimated p e rc e ntag e of th e e ntir e otat e 
wid e premium of companioo ioouing divid e nds; 
{Wj — Tho total amount of dividends in dollars; 
fv) — TTie average percentage dividend issued by 

compani e s issuing dividondo; 
fvi) — Tho av e rag e p> e ro e ntago divid e nd issu e d by all 
companies. 

(1) Prosido the following information on losses and 

loss adjustment exp e ns e s: 

(i^ — For e ach of th e lat e st thr ee availabl e aooid e nt 

and calendar years, undovolofKtd and untrondod 

losses and loss adjustment expenses; 

(ii^ — For e ach rat e l e v e l implem e nt e d in th e lat e st 

throo oalondor years, th e e xpootod loco ratios 

that woro anticipated in tho implemented rates; 

(i«) — For each accident and policy year included in 

th e filing, pwid loooes, oos e basis rooop i 'oo, looo 

d e v e lopm e nt, incurr e d allocat e d loss adjust 

mont expenses (if collected separately from 

losses), — incurred — unallocated — (or combined 

allocat e d — asd — unallocat e d) — looo adjustm e nt 

e xp e ns e s, appli e d tr e nd factors, and tr e nd e d 

incurred losses and loss adjustment expenses. 

(3) Credibility factor devolopmont and application. 

Provide all information r e lat e d to th e d e rivation of 
all cr e dibility — factors contain e d — in th e filing, 
including tho following: 

(a) A description of all data reviewed — and all 

V i 'orkohooto uood; 

(b) A complet e d e scription of tho m e thodology us e d 

to derive these factors; 

fe) A description of alternative methodologies used 

or considorod for us e in tho last thr ee y e ars; 

(4) A dcGoription of th e crit e ria us e d to s e l e ct a 

methodology; 

fe) Sp>ecific — details on the application — of these 

crit e ria in th e sel e ction of a m e thodology' for this 
filing: 

ff) EVjtails on the application of tho methodology to 

this filing. 



(3) Logo dovolopmont faotof dovolopnaont and applioa 
tion on both paid and incurr e d boo e s and in both 
numb e rs and dollars of claims: 

(^ Provide all information related to tho derivation 

of all loss development factors contained in tho 
filing, including th e following: 
(i) A dosoription of all data revi e w e d and all 

worksheets used; 
(ii^ — A complete description of tho methodology 

us e d to derive th e s e faotoro; 
(iii) — A dosoription of alternativ e m e thodologie s 
uood or considorod for use in the last throo 
yoars; 
(iv) A d e scription of th e criteria uo e d to soloot a 

methodology; 
(v) — Spxxiific details on tho application of thooo 
criteria in the selection of a methodolog)' fof 
this filing; 
(vi) Details on the application of th e m e thodology 
to this filing. 

(b) Provide at least tho latest fivo available yoors of 

the aggr e gat e looo data dooorib e d in Subpara 
graphs (3)(T3)(i) through (iii) of this Rule for 
matching companies for all pairs of ouooeooivo 
evaluation datoa. — i\loo ppovido tho ooiroopond 
i«g — looo dovolopment — factors — asd — five year 
av e rag e factors derivabl e from those data. 
(i) — Data on both a policy yeaf and an aooident 

year basis; 
(ii) — Data separat e d into ind e mnity and modiool 

portions, ao well ao oombined data; 
(«♦) — Data separated into paid, case incurred, and 
incurred but not reported portions, as well as 
oombin e d data; 

(e) Proi i 'ld e for e ach of th e Iocs amounts in Subpara 

graph (3)(b) of this Rule, the corresfKjnding 
earned premiums, paid claim counts, incurred 
claim counts, and outstanding claim counts. 

(d) Provid e at least th e lat e st t e n availabl e policy 

years of the incurred loss data described in 
Subpamgmphs (3)(d)(i) through (ii) of thi s Rul e 
from th e Unit Statistical — Plan for matchin g 
polioi e o for all pairs of ouoo e eoiv e e valuation 
dates. — iMso provide tho corresponding loss 
development — factors — aad — five year — average 
factoro derivable from the data. 
(i) — Loss e s separat e d into ind e mnit)' and m e dical 

portions, as well as combined data; 
(it) — IjOsqoq separated into deaths, permanent totals, 
major permanent partials, minor p e rman e nt 
partials, tempomr>' totals, and nonoomponoabl e 
medioolo. 

fe) Provide for each of tho loss amounts in Subpara 

graph (3)(d) of this Rul e the corr e sponding 
incurr e d claim counts and for oaoh of tho policy 
yoars in Subparagraph (3)(d) of this Rule tho 
aggregate earned exposures and standard earned 



1495 



NORTH CAROLINA REGISTER 



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10:15 



PROPOSED RULES 



I 



I 



I 



promium. — Whoro smnll claims ore roportod in 
bulk, pro' i 'ido ouoh information as aoouratoly ao 
fKJOoiblo, givon th e improoioion inherent in auoh 
aggrogato data r 

(I) Provide for each of the policy porioda in Sub 

parogmphfl (3)(b) and (3)(d) of thio Rul e the law 
am e ndment factors for adjusting pact loooeo to 
current bonofit lovola. 

(g) Include a description of the roaaons for tho 

differ e nces botsvoon th e policy year data pro - 
vided in respons e to Subparagraphs (3)(b) and 
(3)(c) of this Rule and those provided in ro 
spKanso to Subparagraphs (3)(d) and (3)(e) of this 

(h) Provide th e information in Subparagraphs (3)(b) 

and (3)(o) of this Rule for each of tho 15 largest 
writers of North Carolina workoro' oomponaa 
tion ineurano e . 

f4^ Trending factor dev e lopm e nt and application: 

(a) Provide all information folatod to tho derivation 

of all trend factors contatnod in the filing inolud 
ing th e following: 
(i) — A description of all data reviewed and all 

worksheets used; 
(ii) — A complete description of the methodology 

used to derive th e s e factors; 
(iii) — A description of alt e rnativ e m e thodologies 
used or considered for use in the last throe 
years; 
(i¥) — A d e scription of th e crit e ria us e d to s e l e ct a 

m e thodology; 
(v) Specific details on tho application of thoao 
criteria in tho selection of a mothodolog)' for 
this filing; 
(vi^ — Details on tho application of the methodology 
to this filing. 

^ Calculate tho following trend factors: 

(i) — Ind e mnity' and m e dical tr e nd factors booed on 
th e lat e st fiv e availabl e policy y e ars of North 
Carolina paid and incurred data; 
(ii) — Indomnit)' and modiool trend factors boood on 
th e latest fiv e availabl e aooid e nt y e ars of North 
Carolina paid and incurr e d dntn; 
(iii) — Indemnity' and modioal trend factors based on 
tho latest fivo available policy years of coun 
tr)fwide paid and incurr e d data; 
(iv) — Ind e mnity' tr e nd factors for individual stat e s 



based on policy year data and thoir reconcilia 
tions with tho countrywide factor; 
(v) — M e dical tr e nd factors for individual stat e s and 
for groups of f ee sch e dul e and non fee ached 
ulo states baaod on incurred policy year data 
and thoir reconciliation with tho countrywide 
factor; 
Th e — factors 



(^ 



-in — Subparagraphs — ('1)(b)(iii), 



( 4 )(b)(iv), and (4)(b)(v) of thi s Rule based on 
accident year data, if available. 



(5) Changes in promium base and exposures. 

(^ For th e intervals listed in thio Subparagraph, 

provide th e numb e r of North Carolina V i 'orkoro' 
compensation policieo and their aggregate pre 
mium for tho latest available five policy years. 
Provide this information soparotoly for stock and 
nonstock — oompani e s — and — for all — oompanioo 
combined! $1 $99, $100 $10Q, $200 $209, 

$300 $ 4 99, $500 — $999, $1,000 — $2,999, 

$3.000 — $1,999, $5,000 — $9,999, $10,000 
$21,999, $25,000 $19,999, $50,000 $99,999, 
$100,000 $2 4 9,999, $250,000 $199,999, and 
over $ 4 99,999. 

(b) Deocribo any oountrywid e diotributions of num 
b e r of policieo or premium by lay e r that are 
used in the filing. — Also provide details of how 
auoh diotributions have boon used in tho rato 
filing and a d e scription of any adjustm e nts that 
hav e been mad e to th e m. 

(e) Provide tho following eatimato s of tho average 

promium discount for each of tho latest fivo 
available policy y e ars: 
(i) — That using tho North Carolina distribution of 
policie s contained in Subparagraph (5)(a) of 
this Rule; 
That using a oountr>r\ » 'ido distribution of r 



(«f 



poli 






im) — That using the North Carolina distribution of 
policies contained in Subparagraph (5)(a) of 
this Rul e adjust e d for its e xclusion of tho 
portions of interstate polioioo not locat e d in 
North Carolina. — In oetimating thio adjustment 
factor calculate and toko into the account tho 
aggr e gat e intrastate portions of thos e policieo 
making up th e oountr^'wide distribution in 
Subparagraph (5)(c)(ii) of this Rule. 

(d) Provide or estimate the following information -en 

e xposur e tr e nds: 
(i) — Th e stat e wid e av e rag e w ee kly wag e for tho 

latest fivo available calendiir year s ; 
(ii) Tho statewide ave r age weekly wage fo r the 
lat e st ten availabl e policy years without th e 
application of a payroll limitat i on; 
(»«) — The statewide average wookly wage for tho 
latest ton available policy years aftor tho appli 
cation of a payroll limitation; 
(iv) — The estimated stat e wid e av e rag e weekly wage 
for the calendar and policy yoars during which 
the ratca will bo in effect. 

(6^ Limiting — factor d e velopment — aad — application. 

Provid e information on th e following it e mo: 

{a) Limitations on losses included in the statistical 

data used in the filing. 

(b) Limitations on th e e xtent of th e rat e l e v e l 

chang e . 

(e) Limitation s on tho extent of cloosification rate 

changes. 



10:15 



NORTH CAROLINA REGISTER 



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1496 



PROPOSED RULES 



(d) Any othor limitationa appliod. 

(?) O r 'orhoad oxponoo do' i 'olopmont and tho applioation 

of oommioBion and brok e rage, other aoquioition 
oxponsofl. general oxfwnaoo, toxoe. lioonaoe, and 

(a) Provid e all information r e lat e d to th e d e rivation 

of all e xponoe provicions contain e d in th e filing 
including tho following! 
fi) — A description of all data reviewed and all 

workohooto uo e d; 
fit) — A oomplote doooription of the mothodologj i ' 

used to derive these factors; 
(ii^ — A de s cription of alternativ e — mothodologioo 
UGod or oonoid e r e d for uoo in th e laot throo 
y e ars; 
(iv) — A description of tho criteria uood to soloct a 

methodology; 
(¥) — Speoifio details on tho applioation of thoGO 
criteria in th e solootion of a m e thodology for 
this filing; 
(vi) — Details on tho application of th e methodology 
to this filing. 

(b) Provide a oomparioon of tho propos e d e xp e ns e 

provi s ions with those composite provision s for 
the 50 largest writers of North Carolina work 
»fs^ — oomponoation — inourono e — included in the 
latest availabl e Insuranc e Exp e ns e Exhibit, with 
those same composite provisions included in the 
proliminar^' data undorlying the next such Ex 
hibit (if available), and with thos e provisions in 
tho latest availabl e Call for 19xx Calendar Y e ar 
Data by State for North Carolina. 

(e) For each of tho ton largest writer s of North 

Carolina — workers' — comp e nsation — insuranoo, 
provid e a otatomont — regarding any aotivitioa 
affecting expense or sorvioo levels undertaken in 
the last thro e years. 

(S) Tho poroont rat e chang e : 

(ft) Provide th e ov e rall stat e wid e rat e change, as 

well OS the amount of the change attributable to 
each of the following: — loss experience, a modi 
fioation of th e tr e nd factor, a change in expense 
provisions, law am e ndm e nts, a chang e in th e tax 
provision, a change in tho assessment provision, 
and any other factors. 

(b) Provide the rote changes for e ach industry' group 

and for each olossifioation. 

(e) If the rate changes ovcntunliy implemented differ 

from those provided in the filing, submit a 
Bupplemont to th e filing that d e ooribos tho impl e 
m e nt e d changes and th e modifications mad e to 
the filing to produce them. — This supplement 
shall bo submittod as soon as poooiblo aftor a 
d e cision is r e ach e d to impl e m e nt rates oth e r than 
thos e that w e r e originally fil e d and in any oaoo 
no later than tho first implementation date of tho 
rates. 



(9) Final prof>osed rates: 

(a) Provid e th e propos e d rateo for each olaooifioa 

(fe) If tho rates eventually implomontod differ from 

tbooo provided in tho filing, submit a oupplomont 
to the filing that d e oorib e o th e impl e m e nted ratoo 
for e aoh olacoi fioation. — This supplement oholl b e 
submitted oa soon as posoiblo aftof a dooioion i a 
roaobod to implement rates other than those that 
w e r e originally filed and in any oooe no later 
than th e first implementation dat e of the ratoo. 

(4©) Investment earning s^ — consisting of invostmont 

irtoome and realized plus unroalizod capital gains, 
from looD, loDo e xp e ns e , and unoamod premium 
rooon i 'oo: 
(a) Calculate — tho amount of investment ineomo 
earned on loss, — loss oxponoo and unoamod 
premium r e s e rv e s from North Carolina workers' 
oomp e nmtion policies (ao a ratio to both not and 
standard camod premium) foF each of the latoot 
five available calendar years and estimate that 
incom e for th e curr e nt y e ar and for all yooro 
during v i 'hich the proposed rates are oxp e oted to 
bo in effect. — Provide tho dotxiils of all caloula 
tions, including tho amount of tho oompoaito 
rooorvoo of each typo at tho bogiiming and e nd 
of e ach of th e lat e st fiv e availabl e calendar 
yearo. i\lso describe and justify' all aosumptions 
used in such calculations. 

(b) Provid e information on th e e stimat e d av e rag e 

length of timo that olapseo botwoon tho ooour 
ronco of a componoablo aocidont in North Caro 
Una and the pfl)'mont of a claim on that accident. 
Tho averag e s hall b e a w e ight e d av e rag e boo e d 
on size of oloim paym e nts. — Eotimate how th e 
length hofl changed over tho latest ton available 
calendar years. 

fe) Provide composit e aoo e t, liabilit)', and incom e 

information from e ach of th e lat e st two Annual 
Statements for which aggregate data ore avail 
able for tho 50 large s t writers of North Carolina 
workers' compensation insuranc e , including th e 
following (in th e som e format and d e tail as th e 
exhibits in individual company statements) ! 
(i) — Pago 2 (Assets); 

(ii) — Pag e 3 (Liabilities, Surplus and Othor Funds); 
(iii) — Pag e A (Und e P iii 'riting and Inv e otm e nt Exhib it)? 
fi¥) — Inauronco Exponso Exhibit Port H, Column 16. 

(44) Identification of applicable statistical plans and 

programs and a c e rtification of oompliano e with 
th e m: 

(ft) Identify' all statistical plans used or consulted in 

preparing this filing and doscribo tho data oom 
piled by each plan. 

(b) Provid e a oorti fioation that there is no e videnc e 

known to the Bureau or to tho statistical agonoioa 
involved that the data that were collected in 



1497 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



i 



fteeef dxmoo with such atntiotical plans and wore 
uood in tho rate Filing ar e not truo and aoourate 
roprooontationo of e ach oompany'o exp e ri e no e to 
tho boat of that company's knowlodgo. 

(e) Provide gonoral — doscription s — of tho oditing 

proooduroo uo e d to v e rify' that tho data wore 
ooU e oted in aooordiino e with th e statiotioal piano, 
and conoiso sununario e of tho adjustmonts and 
corroctions mado to tho oonoolidatod ratomaking 

^i3) Inv e otm e nt oamingo on oapitnl and surplus: — Giv e n 

tho soloctod underwriting profit and oontingoncio a 
provision containod in tho filing, indicate tho 
r e sulting rat e s of return (including oonoideration of 
inv e etm e nt income) on equity capital, on statutory 
s urplus, and on total aaooto. — Show tho derivation 
of all factors used in producing those calculations 
and jufltily' the fairn e ss and reaoonabloneoo of thes e 
rat e s of r e turn. 



I 



I 



(4^ Level of capital/surplu s noodod to support pro 

tnium writings without endangering the solvency 
of m e mb e r oompanioo: 

{«) Provid e aggregate pr e mium to surplus ratio s for 

the latest ton available calendar year s for those 
companies writing North Carolina workers' 
compensation insuranc e during that entir e p e 

(^ Provide estimates of the comparable ratios for 

all companies writing North Carolina workers' 
comp e nsation insurance for all years during 
which th e proposed rates are expooted to be in 
effect, 
(o) Provide information on the amount of surplus 

needed to support tho writing of North Carolina 
workers' compensation insuranc e , taking into 
account the ri s kineoo of the line. — Dosoribo tho 
assumptions used — in the derivation — of that 
amount. 

(4) Provid e all information r e lating to any e xplicit 

Of implicit allocation of surplus by state and by 
lino undortokon in tho filing, including tho 
following: 
(i) A doDoription of all data reviewed and all 

workshoots usod; 
(«) — A complete description of the methodology 

used to produc e this allocation; 
(iii) — A d e Goription of alt e rnativ e m e thodologi e s 
used or con s idered for use in the lost throe 
year s ; 
(iv) — A d e scription of the criteria uo e d to s e lect a 

m e thodology; 
(v) — Specific details on the application of those 
criteria in the selection of a methodology for 
this filing; 
(vi) — E) e tailo on th e application of th e methodology 
to this filing. 
(14) Such other information that may be required by 



any rule adopted by tho Commissioner! 

(a) Provide information on tho following oop e oto of 

work e rs' comp e nsat i on individual risk rating 
plana, including an explanat i on of their purpose 
and a detailed description of thoir derivation: 
(i) — Ex{> e ot e d loos rat e ; 
(ii) — D Ratio; 
(«i) — Excess loss factors; 
(4v) — Exceaa loss adjustment amounts; 
(v) — Table of weighting and ballast values. 

(b) Provid e oil information r e lating to th e profit and 

oontingoncios provision containod in tho filing, 
including tho following: 
(i) — A d e scription of all data r e vi e w e d and all 

workohooto used; 
^ — A complete doocription of tho methodology' 

U9od to deriv e this provi s ion; 
(iii) — A d e scription of alt e rnativ e m e thodologies 
used or oonoidorod for use in th e loot throe 
years; 
(iv) — A description of tho criteria usod to s elect a 

methodology; 
(v) — Sp e cific d e tails on tho application of th e s e 
criteria in the selection of a methodology for 
this filing; 
(vi) — D e tails on th e application of th e m e thodology 
to this filing. 

(e) Include copie s of all agendas and minutes -ef 

meetings of tho North Carolina Rate Bureau 
aff e cting th e filing, ao well ao a list of all att e n 
does at th e s e m ee tings, thoir titles, and th e ir 
affiliations. 

(d) Describe all payments made to all conQult^ults 

(including lawy e rs, actuari e s, and e conomis ts) 
r e lated to this filing and th e pr e vious on e on 
worker s ' oomponoation insurance. — If payments 
cannot bo specifically identified as related to 
particular filings, e otimato them. 

(e) Id e ntify and d e scrib e all changes in mothodolo 

giofl from the previous North Carolina worker s ' 
compensation rate filing. — If any colloctod or 
reported data r e quir e d by this Rule ar e provid e d 
within 30 days aft e r th e initial submittal of a 
filing, that data shall bo mado a part of tho 
filing, provided tho initial submittal aolcnowl 
e dges that it is incompl e te and identifies opooifi 
oally what furth e r data or e to be submitt e d 
within tho time pormitted ; — No filing otherv ^ 'ioo 
comploto shall bo doomed to be proper until such 
tim e that all data r e quir e d by this Rul e hav e 
b ee n submitt e d. 



Statutory Authority G.S. 58-2-40; 58-36-1 5(h). 

.1110 WORKERS COMPENSATION LOSS COSTS 
QUESTIONNAIRE 

For those filings made in accordance with 11 NCAC 10 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1498 



PROPOSED RULES 



■ 1 102(15). supporting information shall be presented as 
follows: 

Reference Filing Adoption Form: 

Insurer's name. 

Contact person for filing. 

Title of contact person. 

Phone number. 



m 

(el 

m 
(g) 
on 

(i) 

tii 

ill 

iM 

(ol 

Ol 

lal 



Insurer's FEIN. 



Insurer's file number. 
Department file number. 
NCRB reference filing number- 
Effective date. 

Insurer's proposed effective date (if different 
from NCRB effective date). 
Insurer's approximate market share of North 
Carolina written premium. 
Whether the multiplier is a pplicable to this filing 
only or to subsequent reference filings. 
Statement of accuracy of information. 
Signature of company official. 
Date signed. 
Summary of Su pporting Data Form: 
Does this filing a pply uniformly to alf workers' 
compensation classes. 
Lx)ss costs modification: 



(ill 



(c) 



ih 

(iii) 
liYl 

(yi) 

(vii) 



Without modification (factor equals 1.000). 

With modification (su pporting documentation 

required). 
Loss costs modification factor. 
Selected expenses (attach Expense Provision 
Exhibit): 

Commission and brokerage. 

Other acquisition. 

General expenses. 

Taxes, licenses, fees, loss based assessments. 

Profit, contingencies, credit for investment 



£el 
ih 

m 
ill 
Ikl 



Other. 

Total (i + ii + iii + iy + v + vi). 
Development of Expected Loss and Loss Adjust- 
ment Expense (Target Cost) Ratio: Expressed in 
decimal form: 1.000-(d)(vii). 
Overall effect of expense constant and minimum 
premiums: Expressed in decimal form, i.e., 
1.2% overall effect would be 0.988. 
Overall effect of size-of-risk discounts plus 
expense gradation recognition in retrospective 
rating: Expressed in decimal form, i.e.. 8.6% 
average discount would be 0.914. 
Provision for premium taxes, licenses, fees, and 
loss based assessments: See NCRB Reference 
Filing, Exhibit II. 

Company formula loss costs multiplier: (l))(ii) 
X (1.000 -h)/ Kg) - (d)(yii)1 x (f). 
Company selected loss costs multiplier: Explain 
any differences between (i) and (j). 
Rate level changes for the coverages to which 



m 

(ml 

(ni 

(ol 



(al 

(ci 

(dl 

(el 



this page applies. 

Are you amending the minimum premium 
formula. 

Are you amending the expense constant(s). 
Are you changing the premium discount sched- 
ules. 

If the answer to Qi^ (m). or {n) is yes, documen- 
tation is required. 
Expense Provisions Exhibit: For the following 
items, provide the three most recent years, the 
average, industry average, and the selected: 
Commissions and brokerage- 
Other acquisition. 
General expenses. 
Taxes, licenses, fees, and loss based assess- 



ments. 

Profit, contingencies, and investment income: 
£]} Profit and contingencies, 
(ii) Credit for investment income. 
£fl Other. 

£gl Total (a + b + c-l-d + e-)-f). 
Indicate if the insurer's actual expense ratios are North 
Carolina, countrywide, or other (explain); and if the 
insurer's actual expense ratios are a percent of standard 
premium, percent of net premium, or other (explain). If the 
selected provisions differ from the average for reasons other 
than rounding, please explain. 

Statutory Authority G.S. 58-2-40; 58-36-15; 58-36-100. 

.1111 WORKERS' COMPENSATION 

The following information is required pursuant to G.S. 
58-36-15(h) for those filings made under G.S. 58-36-100: 
(1) North Carolina losses and loss adjustment ex- 

penses, each on paid and incurred bases without 
trending or other modification for the experience 
period. 

(a) The filer shall include loss and loss adjustment 
expense data from all companies writing North 
Carolina workers' compensation insurance. In 
addition, if exposures are tised in the calculation 
of premiums at present rates, the filer shall 
provide all available exposure data from these 
companies. If the experience of any company 
that writes more than one percent of the North 
Carolina workers' compensation written pre- 
mium has been excluded from any trend or loss 
development calculations, the filer shall identify 
the company and its market share and provide an 
explanation for its exclusion. The filer shall 
also estimate the aggregate market share of other 
companies whose experience is excluded from 
such calculations. 

(b) If any identifiable group of policies is excluded 
from the calculation of classification differen- 
tials, the filer shall describe those policies, 
indicate their market share, and provide an 



1499 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



explanation for their exclusion. 

(c) The filer shall clearly describe all adjustments to 
losses, loss adjustment expenses, expenses as 
defined in G.S. 58-36-100(c). and exposures 
included in the filing. 

(d) The filer shall provide the latest available written 
and earned premiums and market shares for the 
10 largest writers of North Carolina workers' 
compensation insurance. 

(e) The filer shall provide the following information 
on losses and loss adjustment expenses: 

£i} For each of the latest three available accident 
and calendar years, undeveloped and untrended 
losses and loss adjustment expenses; 
£ii} For each accident and policy year included in (c) 

the filing, paid losses, case basis reserves, loss 
development, incurred allocated loss adjust- 
ment expenses £if collected separately from 
losses), incurred unallocated (or combined (d) 

allocated and unallocated) loss adjustment 
expenses, a pplied trend factors, and trended 
incurred losses and loss adjustment expenses. 

(2) Credibility factor development and application. 
The filer shall provide all information related to 
the derivation of all credibility factors contained in 
the filing, including the following: 

A description of all data reviewed: 

A complete description of the methodology used 

to derive these factors: 

A description of alternative methodologies used 

in the last three years: 

A description of the criteria used to select a 

methodology: (e) 

Specific details on the application of these 

criteria in the selection of a methodology for this 

filing: 

Details on the a pplication of the methodology to 

this filing. 

(3) Loss development factor development and applica- 
tion on both paid and incurred bases and in both 
numbers and dollars of claims: 

(a) The filer shall provide all information related to (f) 

the derivation of all loss development factors 
contained in the filing, including the following: 

A description of all data reviewed; 

A complete description of the methodology (g) 

used to derive these factors; 

A description of alternative methodologies 

used in the last three years; 

A description of the criteria used to select a 

methodology: 

Specific details on the application of these (4) 

criteria in the selection of a methodology for (a) 

this filing: 

Details on the application of the methodology 

to this filing. 
Co) The filer shall provide at least the latest five 



(a) 



m 



m 

fiii) 



(vi} 



available years of the aggregate loss data de- 
scribed in Sub-items (3)(b)(i) through (iii) of this 
Rule for matching companies for all pairs of 
successive evaluation dates. The filer shall also 
provide the corresponding loss development 
factors and five-year average factors derivable 
from the data: 
(ii Data on both a policy year and an accident 

year basis: 
(ii) Data separated into indemnity and medical 

portions, as well as combined data: 
(iii) Data separated into paid, case incurred and 

incurred but not rep>orted portions, as well as 

combined data; 
The filer shall provide for each of the loss 
amounts in Sub-item (3)(b) of this Rule, paid 
claim counts, incurred claim counts, and out- 
standing claim counts. 

The filer shall provide at least the latest 10 
available policy years of the incurred loss data 
described in Sub-items (3)(d)(i) through (ii) of 
this Rule from the Unit Statistical Plan for 
matching policies for all pairs of successive 
evaluation dates. The filer shall also provide the 
corresponding loss development factors and 
five-year average factors derivable from the 
data: 
(i) Losses separated into indemnity and medical 

portions, as well as combined data; 
(ii) Losses separated into deaths, permanent totals. 

major permanent partials, minor permanent 

partials, temporary totals, and medicals only. 
The filer shall provide for each of the loss 
amounts in Sub-item (3)(d) of this Rule the 
corresponding incurred claim counts and for 
each of the policy years in Sub-item (3)(d) of 
this Rule the aggregate earned exposures. 
Where small claims are reported in bulk, the 
filer shall provide such information as accurately 
as possible, given the imprecision inherent in 
such aggregate data. 

The filer shall provide for each of the policy 
periods in Sub-items (3)(b) and (3)(d) of this 
Rule the law amendment factors for adjusting 
past losses to current benefit levels. 
The filer shall include a description of the 
reasons for the differences between the policy 
year data provided in response to Sub-items 
(3)(b) and (3)(c) of this Rule and those provided 
in response to Sub-items (3)(d) and (3 )(e) of this 
Rule. 
Trending factor development and a pplication: 
The filer shall provide all information related to 
the derivation of all trend factors contained in 
the filing including the following: 
(i) A description of all data reviewed; 
(ii) A complete description of the methodology 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1500 



PROPOSED RULES 



used to derive these factors; 
(iii) A description of alternative methodologies 

used in the ]ast three years; 
(iv) A description of the criteria used to select a 

methodology: 
(v) Specific details on the a pplication of these 

criteria in the selection of a methodology for 

this filing; 
(vi) Details on the application of the methodology 

to this filing. 
fb) TTie filer shall calculate the following trend 
factors: 
(i) Indemnity and medical trend factors based on 

the latest eight available policy years and 

accident years of North Carolina paid and paid 

plus case data; 
(ii) Indemnity and medical trend factors based on 

the latest eight available accident years and 

policy years of multi-state paid and paid plus 

case data; 

(5) Changes in premium base and exposures. The 
filer shall provide or estimate the following infor- 
mation on exposure trends: 

(a) The statewide average weekly wage for the latest 
five available calendar years: 

(b) The statewide average weekly wage for the latest 
10 available policy years without the application 
of a payroll limitation: 

(c} The statewide average weekly wage for the latest 

\0 available policy years after the application of 

payroll limitation; and 
(d) The estimated statewide average weekly wage 

for the calendar and policy years during which 

the rates will be in effect. 

(6) Limiting factor development and application. The 
filer shall provide information on the following 
items: 

(a) Limitations on losses included in the statistical 
data used in the filing; 

(b) Limitations on the extent of the rate or loss costs 
level change; 

£ci Limitations on the extent of classification rate or 

loss costs changes; and 
(d) Any other limitations applied. 

(7) The percent rate or loss costs change: 

(a) The filer shall provide the overall statewide rate 
or loss costs change, as well as the amount of 
the change attributable to each of the following: 
loss experience, a modification of the trend 
factor, law amendments, a change in the loss 
based assessment provision, and any other 
factors. 

(b) The filer shall provide the rate or loss costs 
changes for each industry group and for each 
classification. 

(8) For assigned risks rate filings, the filer shall 
include support for reasonable margin for under- 



writing profit and contingencies and investment 
income, including realized capital gains. 
(9) For assigned risk rate filings, the filer shall 
provide investment earnings on capital and sur- 
plus. Given the selected underwriting profit and 
contingencies provision contained in the filing, the 
filer shall indicate the resulting rates of return 
(including consideration of investment income) on 
equity capital, on statutory surplus, and on total 
assets. The filer shall show the derivation of all 
factors used in producing these calculations and 
justify the fairness and reasonableness of these 
rates of return. 
(10) As required by G.S. 58-36-15, the filer shall: 

(a) FYovide information on the following aspects of 
workers' compensation individual risk rating 
plans, including an explanation of their purpose 
and a detailed description of their derivation: 

(i) For experience rating plans, the table of ex- 
pected loss rate and discount ratios and table 
of weighting and ballast values. 

(ii) For retrospective rating plans, table of insur- 
ance charges, multipliers (including the deriva- 
tion of any assigned risk subsidy), and table of 
excess loss factors. 

(b) Describe all payments made to all consultants 
(including lawyers, actuaries, and economists) 
related to this filing and the previous one on 
workers' compensation insurance. If payments 
cannot be specifically identified as related to 
particular filings, the filer shall estimate them. 

(c) Identify and describe all changes in methodolo- 
gies from the previous North Carolina workers' 
compensation rate filing. If any collected or 
reported data required by this Rule are provided 
within 30 days after the initial submittal of a 
filing, that data shall be made a part of the 
filing, provided the initial submittal acknowl- 
edges that it is uncomplete and identifies specifi- 
cally what further data are to be submitted 
within the time permitted. No filing otherwise 
complete shall be deemed to be proper until such 
time that all data required by this Rule have 
been submitted. 

Statutory Authority G.S. 58-2-40; 58-36-15(h). 

SECTION .1600 - PROSPECTIVE LOSS COSTS 
FILINGS 

.1603 RATE AND LOSS COSTS 

(a) A rating organization may develop and file a reference 
filing with the Department, which filing shall contain the 
advisory prospective loss costs, the underlying loss data, 
and other supporting statistical and actuarial information for 
any calculations or assumptions underlying those loss costs. 

(b) After a reference filing has been made with the 



1501 



NORTH CAROLINA REGISTER 



November I, 1995 



10:15 



PROPOSED RULES 



Department and determined by the Commissioner to be 
proper, the rating organization will provide its participating 
insurers with a copy of the reference filing. 

(c) A rating organization may print and distribute manuals 
of prospective loss costs, as well as supplementary rating 
information as described in U. NCAC 10 .1604. After an 
initial prospective loss costs reference filing has been made 
by a rating organization and has been determined by the 
Commissioner to be proper, that rating organization shall no 
longer dev e lop or file any minimum premiums in this State. 

(d) Each insurer must individually determine the final 
rates it will file and the effective date of any rate changes 
through an independent company decision-making process. 
Suoh ratoD ohall b e produc e d by adding exp e ns e and profit 
loading and any looo oost modifioation to th e proof> e otiv e 
loss costs dovolopod by tho rating organizat i on. 

(e) If an insurer that is a member, subscriber, or service 
purchaser of a rating organization decides to use the 
prospective loss costs in a proper reference filing in support 
of its own filing, the insurer must submit a proper rate filing 
in accordance with 11 NCAC 10 .1107. In that filing, the 
insurer shall provide justification for the loss cost multipliers 
used in producing the final rates. The insurer's rates are the 
combination of the prospective loss costs and the insurer's 
loss cost multipliers. 

(f) If an insurer files a modification of the prospective 
loss costs in a proper reference filing based on its own 
anticipated experience, an indopondont filing ia required. 
Supporting su pporting documentation shall be required, fef 
any upward or downward modifioationo of th e proopootive 
looo oooto in th e r e f e r e nce filing. 

(g) An insurer may vary expense loads by individual 
classification, grouping or subline of insurance. An insurer 
may use variable or fixed expense loadings or a combination 
of these to establish its expense loadings. 

(h) If an insurer wishes to use a minimum premium of 
any ty{)e, a proper rate filing must be submitted to the 
Department. 

(i) An insurer may file such other information that it 
deems to be relevant and shall provide such other informa- 
tion that is requested by the Department. 

(j) Wh e n e v e r a n e w roforono e filing is filed and d e t e r 
min e d to b e prop e r: An insurer may request to have its loss 
costs multiplier remain on file with the Department and 
reference all subsequent prospective loss costs reference 
filings. Upon receipt of subsequent rating organization 
reference filings, the insurer's rates shall be the combination 
of the prosf>ective loss costs and the loss cost multiplier on 
file with the Department, and will be effective on or after 
the effective date of the prospective loss costs. The insurer 
need not file anything further with the Department. 

(+) If an insurer docidoa to uao tho prospoctivo losa 

costs to revise its ratoo, tho insurer must file 
with th e Department a rate filing qu e otionnoir e 
aooording to 11 NCAC 10 .1107, including the 
offcctivo date of th e ratoo and copies of all now 
rate pagoo. 



(2) If on insuror dooidoe not to uoo tho fovioiona, the 
Inourer is not r e quired to make any filing with 
th e Departm e nti 

(k) If an insurer that has filed to have its loss costs 
multiplier remain on file with the Department intends to 
delay, modify, or not adopt a particular rating organization's 
reference filing, the insurer must make a filing with the 
Department before the effective date of the reference filing. 

(1) To the extent that an insurer's final rates are deter- 
mined solely by applying its loss costs multiplier to the 
prospective loss costs contained in a rating organization's 
reference filing and printed in the rating organization's 
manual, the insurer need not develop or file its final rate 
pages with the Department. 

(m) If an Insurer has filed to have its loss cost multiplier 
remain on file, applicable to subsequent reference filings, 
and a new proper reference filing is filed: 

(1) If the insurer decides to use the prospective loss 
costs and effective date as filed, the insured does 
not file anything with the Department. The 
insurer's rates are the combination of the pro- 
spective loss costs and the on-file loss cost 
multiplier. The new rates become effective on 
the effective date of the loss costs. 

(2) If the insurer decides to use the prospective loss 
costs as filed, but with a different effective date, 
the insurer must notify the Department of its 
effective date before the effective date of the 
loss costs. 

(3) If the insurer decides to use the prospective loss 
costs, but wishes to change its loss cost multi- 
plier, the insurer must make another filing in 
accordance with Paragraphs (d) through (f) of 
this Rule before the effective date of the loss 
costs. 

(41 If the insurer decides not to revise its rates using 
the prospective loss costs, the insurer must 
notify the Department before the effective date 
of the loss costs, 
(n) If the insurer has not elected to have its loss cost 
multiplier remain on file, applicable to the future prospec- 
tive loss cost reference filings, and a new proper reference 
filing is filed: 

(1) If the insurer decides to use the prospective loss 
costs to revise its rates, the insurer must file 
with the Department a rate filing in accordance 
with Paragraphs (d) through £0 of this Rule, 
including the effective date of the rates. 
£2} If an insurer decides not to use the revisions, the 
Insurer is not required to make any filing with 
the Department. 

Statutory Authority G.S. 58-2-40; 58-36-15; 58-37-35; 
58-40-30; 58-41-50; 58-45-45; 58-46-55. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1502 



PROPOSED RULES 



Notice Ls hereby given in accordance with G.S. 
150B-21.2 that the N.C. Department of Insurance 
intends to amend rule(s) cited as 11 NCAC IIB .0111, 
.0114, .0141, .0146. .0303; IIC .0112, .0132; 14.0202, 
.0603 .0705; adopt 11 NCAC IIB .0306; IIC .0313, IIC 
.0504 - .0505; 14 .0432; repeal 11 NCAC IIB .0140, 
.0142, .0148, .0302, .0304 - .0305; IIC .0113, .0118; IID 
.0108 - .0109, .0302 - .0305; 14 .0430 - .0431. 

Proposed Effective Date: February 1, 1996. 

A Public Hearing will be conduaed at 10:00 a.m. on 
November 28, 1995 at the Dobbs Building, 3rd Floor 
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611. 

Reason for Proposed Action: 

11 NCAC IIB .0111, .0114, .0141, .0146, .0303, .0306; 

lie .0112, .0132; IIC .0313, .0504 - .0505; 14 .0202, 

.0432, .0603, .0705 - Necessary to comply with changes 

made in the statutes during the last session of the General 

Assembly. 

11 NCACllB .0140, .0142, .0148, .0302, .0304 - .0305; 

lie .0113, .0118; IID .0108 - .0109, .0302 - .0305; 14 

.0430 - .0431 - Rules no longer necessary. 

Comment Procedures: Written comments and questions 
should be directed to Ray Martinez, 430 N. Salisbury Street, 
Raleigh, NC 27611, (919) 733-5633. Oral presentations 
may be made at the public hearing. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government funds. 

CHAPTER 11 - FES[ANCIAL EVALUATION 
DIVISION 

SUBCHAPTER IIB - SPECIAL PROGRAMS 

SECTION .0100 - SECURITIES 

.0111 CONVERSION TO CASH MASTER 
TRUST 

(a) As used in this Rule and elsewhere in this Section: 

(1) "PTC" means the electronic transfer of munici- 
pal securities through the Deposit Trust Corpo- 
ration. 

(2) "Federal Book Entry" means the electronic 
transfer of U.S. Treasury obligations and cash 
through member banks of the Federal Reserve 
System. 

£b] The Department of Insuranc e will shall process and 
release securities that have matured only upon receipt of a 
written request from the company and where adequate 
replacement has been made by the company, mado. Bonds 
or notoo e ligible for Book Entr>', DTC or CD will oonvort 
to oaoh on the day of maturity. Securities eligible for 
Federal Book Entry or DTC shall be converted to cash at 



maturity. Certificates of deposit shall be redeemed or rolled 
over at maturity. Book Entry io oonoluoivoly prooutaod to 
m e an th e e l e otronio tranof e r of Unitod Statoo Troaour)' 
obligations and coah through mombor bonk s and tho Fodoral 
RoQoi" . 'o oyotom. — DTC is oonoluoivoly pfooumod to moon 
Dopooitory Truot Corporation N.Y. e leotronio tranof e r of 
s e ouriti e s primarily munioipals. 

Statutory Authority G.S. 58-2-40; 58-5-1; 58-5-75. 

.0114 DEPOSITS HELD IN TRUST BY 

COMMISSIONER OF INSURANCE 

The establishment and servicing of deposits shall be done 
by authority of the Commissioner of Insurance only. The 
deposits shall be in the custody of the Stat e Treasur e r- 
Master Trust Bank. The procedure for replacement of the 
deposit shall be as follows: 

(1) The company desiring to replace bonds or notes 
shall make a written request for replacement to the 
Commissioner of Insurance. This request shall be 
made in advance of the shipment of any securities. 

(2) The replacement dejxjsit shall be of an equal value 
to the bond or note being replaced. 

(3) The Commissioner may shall require additional 
securities at the time of replacement when ho fools 
tbat if the citizens and policyholders of this state 
»ay will have less protection as a result of the 
replacement. 

Stamory Authority G.S. 58-2-40; 58-5-1; 58-5-40; 58-5-90; 
58-5-95. 

.0140 USE OF MASTER TRUST ALL 

EXISTING COMPANIES TRANSFERRED 

Inouranoo — oomponi e o — having — ooouritioo on dopooit at 
Novombor 27. 19 8 5 aro advisod that all such socuritios will 
bo tranflforrod from tho vault at tho Stato Trooauror'a Offioo 
to a North Carolina Bonk ao provid e d under tho tormo of an 
agr ee m e nt b e tw ee n th e Departm e nt of Inourono e and tho 
succoasful bidder bonk on REP .0005 4 dated August 15, 

Statutory Authority G.S. 58-7.5; 58-9. 

.0141 USE OF MASTER TRUST TO INCREASE 
DEPOSrr 

All insurance companies that are required by law to 
increase the market value of the securities on deposit in 
North Carolina as a result of Rules 11 NCAC IIB .0106 
through 11 NCAC IIB .0107 muot mak e ito inoroooo dopooit 
in oompliono e with tho Mast e r Truot Agr ee m e nt e nt e red 
between tho Commiosioner of Inouronco, State of North 
Carolina and tho ouocossful bidder bank on REP .00054 
dat e d August 15, 19 8 5 on ouoooooor bank, shall effect the 
increases in compliance with the Master Trust Agreement. 
Tlie Master Trust Agreement is the contract between the 
Department and the Master Trust Bank under G.S. 58-5-1; 



1503 



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November 1, 1995 



10:15 



PROPOSED RULES 



variable annuit)' oontraota in North Corolintt. 
(b^ — In this oonn e otion, th e Commiooionor will oonsidor 
among oth e r thingo: 

^4^ tho hiotor)' and fmanoial condition of the com 

pafiyt 
(2) th e ohoraot e r, reoponoibility and g e n e ral fitnooo 

of th e offio e re and dir e otore of the company; and 
(3^ the law and rogulationo under which tho com 

pany is authorized in tho atato of domicile to 

ioou e variabl e onnuit)' contracts. 



is on file in the Financial Compliance Division of the 
Department; and is available for inspection or copying in 
accordance with G.S. 58-6-5. 

Statutory Authority G.S. 58-2-40; 58-5-1; 58-5-25; 58-5-40; 
58-5-95. 

.0142 CONVERSION FROM STATE 

TREASURER TO MASTER TRUST BANK 

In order to faoilitato th e tranofer of se ouritioo from th e 
Offioo of State Troaouror to the ouoo e osful bidder bank, all 

socuritioo v ^ 'oro moved by tho bidder bank where eligible for Statutory Authority G.S. 58-79.2. 
Federal Book Entr)' all oocuritioo were placed in Federal 
Book Entiy. Wh e re e ligibl e for DTC Systems all o e ouriti e a 
wore placed in DTC. — All other o e ouriti e s were transf e rr e d 
in phyoical form to the auccoosful bidder bank, aa its 
appointed Fiduciar)'. 

Statutory Authority G.S. 58-7.5; 58-9. 

.0146 MASTER TRUST BANK ABILITY 
TO REGISTER SECURITIES 

From time to time registration of securities aay shall be 
changed by the Master Trust Bank to facilitate redemption 
sell or transfer of accuritioa such the redemption, sale, or 
transfer of securities on deposit. Such changes wiii shall be 
made after a written request for approval has been made by 
the Master Trust Bank and received and acknowledged 
a pproved by the Commissioner of Insurance. 

Statutory Authority G.S. 58-2-40; 58-5-1; 58-5-30; 58-5-63; 
58-5-70; 58-5-90; 58-5-95. 

.0148 MASTER TRUST CONVERSION TO 
CASH 

Ml doposita will bo oonvortod to oaoh on thoir maturity'. 
It shall bo tho roaponaibility of tho insurance company to 
mok e arrang e m e nts in aooordano e with applicabl e Rul e 1 1 
NCAC IIB .0151 to p e rf e ct timely r e l e as e and r e plac e m e nt. 

Statutory Authority G.S. 58-7.5; 58-9. 

SECTION .0300 - VARIABLE CONTRACTS 



.0302 QUALIFICATION TO ISSUE 
VARIABLE ANNUITIES 

(«) — No company shall d e liv e r or issu e for d e liv e ry 
variable contracts within this state unless: 

fi) It is liconsod or organized to do a life inauranco 

or annuity business in this stat e ; 

Th e Commiooionor io oatiofiod that its financial 



m- 



condition and its methods of operation in con 
noction with tho issuance of such contracts will 
not rend e r its operation hazardous to th e public 
or its policyhold e r s in this state; and 

(3) TTie Commissioner has am e nd e d tho liconso of 

auoh — company — te — fofloct — authority — to write 



.0303 INFORMATION REQUIRED PRIOR 
TO APPROVAL 

Any licensed life insurance company desiring permission 
to amend its license to include the authority to write variable 
annuities contracts shall submit to the Commissioner for 
review the following items: 

(1) copies of all laws and regulations imder which the 
company is authorized in its state of domicile to 
issue variable annuities; contracts; 

(2) a description of the method of operations of the 
company in its state of domicile as regarding 
variable annuitios r contracts, the description to 
include, method or methods of marketing the 
variable annuiti e s contracts and the number of 
years the company has issued such contracts; 

(3) a description of the company's proposed method 
of o{>eration in the State of North Carolina; The 
description shall include method or methods of 
marketing the variable annuities, contracts, the 
types of contracts to be issued and the criteria 
followed by the company in the selection of agents 
to sell the variable annuity' contracts; 

(4) oop i og of all p>ortinont dooumonts, s uch aa oorpo 
fate — resolutions, — eter-; — whoroby — one Of more 
s e parat e accounts have boon ootablish e d by th e 
company — for tho purpose of ioouing variable 
annuities; copies of aH pertinent documents, 
including: 

(a) corporate resolutions that indicate that one or 
more separate accounts have been established 
and funded by the company for the purpose of 
issuing variable contracts; 

(b) prospectus or offering memorandum filed with 
the Securities and Exchange Commission dis- 
closing the information contained in H. NCAC 
IIB .0306; 

(5) certified copies of the separate accounts annual 
statements as filed with domiciliary state for the 
three years prior to the request for such authority 
in the State of North Carolina; 

(6) a statement from the company indicating the other 
states in which the company has applied for 
permission to write variable aimuity products 
contracts and further indicating if the state has 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1504 



PROPOSED RULES 



approved or disapproved such application — (+f 
dioapprovod, otate rottDon). the a pplication: and if 
disapproved, the reason or reasons for disap- 
proval. 
Tho CommiBBionor may don>' pormJBBion to any oompany 
failing to oubmit tho information in thio Rul e ; how e v e r, 
oompanioo who oannot comply with Itom (5) of thio Rul e 
will bo conoidorod on a oaBO by oaoo boBia if all other 
information io aatiofactor)'. 

Statutory Authority G.S. 58-2-40; 58-7-95. 

.0304 FOREIGN COMPANIES: VARUBLE 
ANNUITY LAWS 

If tho law or ruloo of tho otat e of domicil e of a for e ign 
company provides a dogroo of protection to tho policyhold 
ora and tho public which io oubatontially equal to that 
provid e d by thooo rul e o, tho CommiGoionor, to th e e xt e nt 
doom e d appropriate by him in hio discr e tion, may oonoid e r 
eomplianoo with such law or ruloo aa oomplianoo with thooo 

Statutory Authority G.S. 58-2-40; 58-7-95. 

.0305 SEPARATE ACCOUNTS OF DOMESTIC 
LIFE INSURANCE COMPANY 

(a) — A domootio lif e insurance oompany issuing variabl e 
annuity contracts shall oatablish one or moro separate 
accounts purauont to G.S. 5 8 7 95, and shall allooato to auoh 
account or aooounto amounts roooivod or retain e d in oonn e o 
tion with variable oontraoto, — subj e ct to th e following 
proviaions! 

(^ Tho amounts allocated to any separate account 

and aooumulations th e r e on e qual to the reoon'e 
liability' of th e s e parate account shall bo inveotod 
in accordance v ^ 'ith the investment laws of this 
State, however: 
{A^ — i\ny amounts in e xcooo of guoh rooop i 'o liability' 
may bo invootod and reinv e st e d without r e gard 
to any requirements or limitations proscribed 
by such investment laws, provided; 
fB) — That ouch res e rv e liabilit)' has boon inv e sted ao 
heroin r e quired and ohall — inoludo b e nefits 
guaranteed as to amount and duration and 
funds guaranteed as to principal amount or 
stat e d rat e of int e r e st . 
Th e inv e otm e nt in ouch separate account or aooounto shall 
not be token into account in applying the investment limita 
tions applicable to other investments of tho company. 

(S) With r e sp e ct to 75 p e rc e nt of tho market value 

of th e total aoooto in a s e parat e account, no 
company s hall purchase or other i viso acquire the 
securitioa of any isauor, other than oocuritioo 
issu e d or guarantood ao to principal or inter e st 
by th e Unit e d Stat e s, if imm e diat e ly aft e r such 
purchase or acquisition tho market " . 'aluo of auoh 
investment, together with prior investments of 



such separate ocoount in such security token at 
mark e t, would oxoood 10 p e roont of th e marke t 
value of tho aoo e to of said oopamt e aooount; 
provided, however, that tho Commissioner may 
waive such limitation if, in hio opinion, ouoh 
waiv e r will not render tho operations of ouch 
s e pwrat e aooount hazardous to th e public or tho 
polioyholdoro in thio otate. 

(S) No separate account shall invest in tho voting 

ooouritioo of a singl e issu e r in an amount in 
0X0000 of 10 p e rcent of tho total issued and 
outstanding voting securitie s — of such issuer 
provided that tho foregoing shall not apply with 
r e sp e ct to s e curiti e s hold in s e parate aooounto, 
th e voting rights in which aro oxoroisablo only in 
accordance — with — instructions — from — persons 
having interests in s uch accounts. 

{4) Th e limitations provided in Subpwiragraphs (a)(2) 

and (a)(3) of thio Rul e shall not apply to tho 

investment with respect to a separate account in 

tho securities of an investment oompany regi s 

torod under th e Inv e stm e nt Company Aot of 

IQilO, provided that th e invootmonto of ouoh 

investment company comply in Bubotanco with 

Subparagraph s (2) and (3) of thio Paragraph. 

(fe) — Unl e ss oth e p i vis e approved by tho Commiooionoi r 

ass e ts allocated to a s e parate account shall bo valu e d at their 

market value on tho date of valuation, or if there is no 

readily available market, then as provided under tho torma 

of th e contract or the rul e s or oth e r written agroomont 

applicabl e to s uch s e parat e aooount; provided, that unless 

othoiv i 'i s o a[>provod by tho Commisaionor that portion of tho 

assets of s uch separate account equal to the company' s 

rocerve liabilit)^ with r e gard to th e guaranteed b e n e fits and 

funds roforrod to in Parts (A) and (B) of Subparagraph (a) 

(1) of this Rule, if any, shall bo dotorminod in accordance 

with actuarial procedures that recognize tho variable nature 

of tho benefits provid e d and any mortality guarantooo. 

If and to th e e xt e nt so provid e d und e r th e applicable 

contracts, that portion of the anseto of any such separate 

account equal to tho rosor^'os and other contract liabilities 

with r e sp e ct to such aooount ohall not b e charg e abl e with 

liabilities arising out of any oth e r busin e ss the oompany may 

conduct. Notwithstanding any other provisions of law a 

company may: 

44^ with r e sp e ct to any s e parate aooount r e gist e r e d 

with th e Securities and Exchange Commiooion as 
a unit investment trust, exercise voting rights in 
conn e ction with any s ecurities of a regulated 
inv e otm e nt oompany rogiotorod und e r th e Inv e st 
m e nt Company Aot of 1 9 10 and h e ld in such 
sopamte accounts in accordance " ^ 'ith instructions 
from persons having intorooto in such account 
ratably ao d e t e rmin e d by th e oompany; or 

(2) with r e sp e ct to any s e parat e aooount r e gist e r e d 

with tho Soouritio o and Exchange Commission as 
a management investment company, establish for 



1505 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



such aooount a oommittoo, board, or other body, 

tho membero of whioh may or may not b e 

othop . vioo affiliat e d v , <\th ouoh oompany and may 

bo olootod to ouoh momborsbjp by tho voto of 

pwraons having intoroet in o uch account ratably 

ao dotorminod by tho oompany; Suoh oonrniitt ee , 

board or other body may hav e tbo power, exer 

cifloblo alono or in oonjunction with others, to .0112 



Statutory Authority G.S. 58-2-40; 58-7-95 (r). 



manage such aoparato account and tho invoot 
mont of ito aooeto. 



SUBCHAPTER IIC - ANALYSIS AND 
EXAMINATIONS 

SECTION .0100 - GENERAL PROVISIONS 

CUSTODLVL AND nSCAL AGENCY 
AGREEMENT 



Tho Model Cuotodial Agre e ment d e signated oc 1 1 NfCAC 
(e) — A oompany, oommittoo, board or other body may llA .01 8 1 hoo boon doomed aoo e ptabl e by th e D e partment 
mako ouch other provisions in roopoct to any such soporato for the custody of tho socuritios of a domestic insuranoo 

company. — Other custodial agreomonts in substxmtially tho 
same form aa this model ar e aoo e ptabl e — provid e d the 



account as may bo deomod appropriate to facilitate oompli 
onoo with requiromento of any federal or state law now or 
boroafter in offoot; provid e d that tho Commiooionor appro^' e o 
suoh provisions ao not hazardous to tho public or tho 
company's policyholdors in this state. 
A oompany shall maintain in e ach suoh s e parat e aooount 
ooooto with a value at l e aot e qual to th e rooerveo and other 
contract liabilities with rospoct to such account, except as 
may othorv i 'iso bo approved by the Commissioner. — Rules 
und e r any provision of th e inourano e laws of this state or 
any r e gulation applioabl e to th e offio e rs and dir e ctors of 
insurance oomponioo with roflp>oct to conflicts of interest 
shall also apply to membero of any separate aooounts' 
oommitt e o, board or oth e r similar body. — No officer or 
director of suoh oompany nor any mombor of th e commit 
too, board or body of a separate account shall rooeivo 
directly or indirectly any commission or any other compon 
sation with r e sp e ot to the purohas e or sol e of ass e ts of ouoh 
separate aooount. 

Statutory Authority G.S. 58-2-40; 58-7-95. 

.0306 DISCLOSURE REQUIREMENTS 

The prospectus or offering memorandum of a life insur- 
ance company applying for a license to sell variable con- 
tracts in this State shall include the following language in at 
least 10-point boldface capital letters: 

"ATTENTION NORTH CAROLINA 
INVESTORS: THE INFORMATION 
CONTAINED D^ THIS VARIABLE 
CONTRACT OFFERING HAS NOT 
BEEN APPROVED OR DISAP- 
PROVED BY THE COMMISSIONER 
OF INSURANCE OF THE STATE OF 
NORTH CAROLINA: NOR HAS THE 
COMMISSIONER RULED UPON THE 



ADEOUACY OR ACCURACY OF 
THIS DOCUMENT. 
CONTRACTS SOLD 



VARIABLE 
BY PROSPEC- 



TUS MIGHT NOT BE COVERED BY 
THE NORTH CAROLINA LIFE AND 
HEALTH INSURANCE GUARANTY 
ASSOCIATION." 



minimum provisions and safeguards of th e model are 
included thoroin. Domestic insurance companies subject to 
G.S. 58. Articles \ through 67. that contract with third 
parties for custodial and fiscal agency services shall execute 
written agreements evidencing the services to be rendered. 
The agreements shall contain the minimum provisions and 
safeguards contained in the Model Custodial Agreement or 
Model Custodial and Fiscal Agency Agreement. Domestic 
insurance companies shall file their written agreements and 
any amendments with the Commissioner. The Model 
Custodial Agreement and the Model Custodial and Fiscal 
Agency Agreement are on file in the Financial Compliance 
Division of the Department and are available for inspection 
or copying in accordance with G.S. 58-6-5. 

Statutory Authority G.S. 58-2-40; 58-19-30(b)(4); 58-34-10. 

.0113 MODEL CUSTODUL AND FISCAL 
AGENCY AGREEMENT 

The — Model — Cuotodial — oad — Fisool — Agenoy — Agreomont 
d e signated as 11 NCAC llA .01 8 5 hoo boon d ee med 
acceptable by tho Dopartmont for tho custody and control of 
tho oeouritioQ of a domestic insurance company. — Othof 
ouotodial and fioool ag e noy agreem e nts in substantially tho 
sam e form as this mod e l are aooeptable provided tho 
minimum provis i ons and safeguards of the model ore 
included thoroin. 



Statutory Authority G.S. 58-79; 58-79.1. 

.0118 COLLECTION PROCEDURES FOR 
EXAMINATION EXPENSE 

(a) Each e xamin e r will p e riodioally prepar e an "Exam 
inor's Exponso and Days Worked Report" for oxaminationa 
of each insurance oompany. — An examiner participating on 
th e e xamination — of a for e ign incurano e — oompany will 
forward tho originals of the reports to tho Commiooion e r 
p>oriodically and retain copies for tho oxaminor'o own 
record. — Tho examiner in charge on the examination — ef 
domostio insuranc e oompanieo will appro' i ^o and forward th e 
originals of e aoh e xaminer's reports to th o Commiooion e r 
periodically and retain ono copy of oach report for his 
records. 



10:15 



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(b) Upon vorification of tho oxaminor'o oxponoo foporto, 
tho CommJooionor or hio dooignoo ohall prepar e an invoic e 
and p e riodioally bill th e incurono e oompanioo for oharg e o for 
days workod. as woll as tho oxponso ohargoe for oach 
oxaminor. — All invoices for oxponso a and daily v i 'ork ohargoa 
arc to bo bill e d dir e ctly by th e D e partment to th e company 
under e xamination. — Th e company io dirootod by tho invoic e 
to aubmit ito paymonto directly to tho Dopartnwnt to tho 
company under oxamination. — Tho company is diroctod by 
tho invoice to oubmit ito paym e nts dir e ct to th e D e partm e nt 
for both oxpenooo and ohargoo for dayo work e d and to mak e 
checks payable to tho Department of Insurance. 

(c) All funds received from daily chargea are for tho sole 
purpoDO of funding th e direct and indirect coot of op e rations 
of th e Field Audit Section of th e Financial Evaluation 
Division of tho Department. — All charges are to bo deter 
mined on a formula basis, to be adjusted from time to time 
ao need and ciroumotances r e quir e . 

Statutory Authority G.S. 58-2-40; 58-2-1 33(c). 

.0132 ACCOUNTING FOR SALVAGE AND 
SUBROGATION 

Whenever any insurance company is operating in a manner 
that is hazardous to its policyholders, creditors, or the 
general public for any of the reasons set out in G.S. 58-30- 
60(b), or whenever any insurance company is "impaired". 
as defined in G.S. 58-30-12(a)(2). or "insolvent", as defined 
in G.S. 58-30-10-13. the Commissioner shall disregard any 
credit taken by the company No insurance company shall 
tak e credit in any annual or interim financial statement filed 
with the Department for salvage or subrogation recoveries 
until the recoveries have been reduced to cash or its equiva- 
lent. Salvage or subrogation recoveries reduced to cash or 
its equivalent shall be accounted for as an offset to losses 
paid. This Rule does not apply to title or mortgage guar- 
anty insurers. 

Statutory Authority G.S. 58-2-40; 58-7-162. 

SECTION .0300 - HEALTH 
MAINTENANCE ORGANIZATIONS 

.0313 NET EARNED INCOME DEFINmON: 
HMO 

As used in G.S. 58-67-5(1), "net earned income" means 
the sum of net income or loss and interest on surplus notes 
for the calendar year. 

Statutory Authority G.S. 58-2-40; 58-67-5 fi). 

SECTION .0500 - REINSURANCE 

.0504 TRUST AGREEMENTS QUALIFIED 
UNDER G.S. 58-7-26 

(a) As used in this Rule: 
(1) "Beneficiary" means the entity for whose sole 



benefit the trust has been established and any 
successor of the beneficiary by operation of law. 
If a court of law appoints a receiver as successor 
in interest to the named beneficiary, then the 
named beneficiary is the court -appointed 
domiciliary conservator, rehabilitator. or liqui- 
dator. 

(2) "Financial institution" means a qualified United 
States financial institution as defined in G.S. 58- 
7-26(c). 

£3} "Grantor" means the entity that has established 

a trust for the sole benefit of the beneficiary. 
When established in conjunction with a reinsur- 
ance agreement, the grantor is the unlicensed, 
unaccredited assuming insurer. 

("4) "Obligations" means: 

(A) Reinsured losses and allocated loss expenses 
paid by the ceding company, but not recovered 
from the assuming insurer: 

(B) Reserves for reinsured losses reported and 
outstanding; 

(C) Reserves for reinsured losses incurred but not 
reported; and 

CD) Reserves for allocated reinsured loss expenses 
and unearned premiums. 
(h) Required conditions for trust agreements, 
(ll The trust agreement shall be entered into be- 
tween the beneficiary, the grantor, and a trustee, 
which trustee shall be a qualified financial 
institution. 
(2} The trust agreement shall create a trust account 
into which assets shall be deposited. 

(3) All assets in the trust account shall be held by 
the trustee at the trustee's office in the United 
States. 

(4) The trust agreement shall provide that: 

(A) The beneficiary may withdraw assets from the 
trust account at any time, without notice to the 
grantor, subject only to written notice from the 
beneficiary to the trustee; 

(B) No other statement or document is required to 
be presented in order to withdraw assets, 
except that the beneficiary may be required to 
acknowledge receipt of withdrawn assets; 

(C) It is not subject to any conditions or qualifica- 
tions outside of the trust agreement; and 

(D) It shall not contain references to any other 
agreements or documents except as provided 
for under Subparagraph (II) of this Paragraph. 

(5) The trust agreement shall be established for the 
sole benefit of the beneficiary. 

(6) The trust agreement shall require the trustee to: 

(A) Receive assets and hold all assets in a safe 
place; 

(B) Determine that all assets are in such form that 
the beneficiary, or the trustee upon direction 
by the beneficiary, may whenever necessary 



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negotiate any such assets, without consent or 
signature from the grantor or any other per- 
son: 

(C) Furnish to the grantor and the beneficiary a 
statement of all assets in the trust account upon 
its inception and at intervals no less frequent 
than the end of each calendar quarter: 

(D) Notify the grantor and the beneficiary within 
10 days before the making of any deposits or 
withdrawals from the trust account: 

(E) Upon written demand of the beneficiary, 
immediately take all steps to transfer all 
right, title, and interest in the assets held in the 
trust account to tjie beneficiary and deliver 
physical custody of the assets to the benefi- 
ciary: and 

(F") Allow no substitutions or withdrawals of assets 
from the trust account, except on written 
instructions from the beneficiary: except that 
the trustee may, without the consent of, but 
with notice to. the beneficiary and upon the 
call or maturity of any trust asset, withdraw 
the asset upon the condition that the proceeds 
are paid into the trust account. 

(7) The trust agreement shall proyide that at least 30 
days, but not more 45 days, before termination 
of the trust account, that written notification of 
termination shall be delivered by the trustee to 
the beneficiary. 

(8) The trust agreement shall be made subject to and 
governed by the laws of the state in which the 
trust is established. 

(9) The trust agreement shall prohibit invasion of 
the trust corpus for the purpose of paying com- 
pensation to. or reimbursing the expense of, the 
trustee. 

(10) The trust agreement shall provide that the trustee 
shall be liable for its own negligence, willful 
misconduct or lack of good faith. 

(1 1) When a trust agreement is established in con- 
junction with a reinsurance agreement covering 
risks other than life, annuities, or accident and 
health, where it is customary practice to provide 
a trust agreement for a specific purpose, such a 
trust agreement may provide that the ceding 
insurer shall undertake to use and apply amounts 
drawn upon the trust account, without diminu- 
tion because of the insolvency of the ceding 
insurer or the assuming insurer, for the follow- 
ing purposes: 

(A) To pay or reimburse the ceding insurer for the 
assuming insurer's share under the specific 
reinsurance agreement regarding any losses 
and allocated loss expenses paid by the ceding 
insurer, but not recovered from the assuming 
insurer, or for unearned premiums due to the 
ceding insurer if not otherwise paid by the 



assuming msurer: 

(B) To make payment to the assuming insurer of 
any amounts held in the trust account that 
exceed 102 percent of the actual amount re- 
quired to fund the assuming insurer's obliga- 
tions under the specific reinsurance agreement: 
or 

(C) Where the ceding insurer has received notifi- 
cation of termination of the trust account and 
where the assuming insurer's entire obligations 
under the specific reinsurance agreement 
remain unliquidated and undischarged 10 days 
before termination date, to withdraw amounts 
equal to the obligations and deposit those 
amounts in a separate account, in the name of 
the ceding insurer in any qualified United 
States financial institution as defined in G.S. 
58-7-26(c) apart from its general assets, in 
trust for such uses and purposes specified in 
Parts (b)(ll)(A) and (B) of this Rule as may 
remain executory after such withdrawal and 
for any period after the termination date. 

(12) The reinsurance agreement entered into in 
conjunction with the trust agreement may, but 
need not, contain the provisions required by Part 
(d)(iyB) of this Rule, as long as these required 
conditions are included in the trust agreement. 

(c) Permitted conditions for trust agreements. 

(1) The trust agreement may provide that the trustee 
may resign upon delivery of a written notice of 
resignation, effective not less than 90 days after 
receipt by the beneficiary and grantor of the 
notice: and that the trustee may be removed by 
the grantor by delivery to the trustee and the 
beneficiary of a written notice of removal, 
effective not less than 90 days after receipt by 
the trustee and the beneficiary of the notice: 
provided that no such resignation or removal 
shall be effective until a successor trustee has 
been duly a ppointed and approved by the benefi- 
ciary and the grantor and all assets in the trust 
have been duly transferred to the new trustee. 

(2) TTie grantor may have the unqualified right to 
vote any shares of stock in the trust account and 
to receive from time to time payments of any 
dividends or interest upon any shares of stock or 
obligations included in the trust account. Any 
such interest or dividends shall be either for- 
warded promptly upon receipt to the grantor or 
deposited in a separate account established in the 
grantor's name. 

(3) The trustee may be given authority to invest, 
and accept substitutions of. any funds in the 
account: provided that no investment or substitu- 
tion shall be made without prior approval of the 
beneficiary, unless the trust agreement specifies 
categories of investments acceptable to the 



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beneficiary and authorizes the trustee to invest 
funds and to accept substitutions which the 
trustee determines are at least equal in market 
value to the assets withdrawn and that are con- 
sistent with the restrictions in Part (dlfDCB) of 
this Rule. 

(4) The trust agreement may provide that the benefi- 
ciary may at any time designate a party to which 
all or part of tlie trust assets are to be trans- 
ferred. Such transfer may be conditioned upon 
the trustee receiving, prior to or simultaneously, 
other specified assets. 

(5) The trust agreement may provide that, upon 
termination of the trust account, all assets not 
previously withdrawn by the beneficiary shall, 
with written approval by the beneficiary, be 
delivered over to the grantor. 

(d) Additional conditions applicable to reinsurance 
agreements. 

( 1) A reinsurance agreement that is entered into in 

conjunction with a trust agreement and the 
establishment of a trust account, may contain 
provisions that: 

(A) Require the assuming insurer to enter into a 
trust agreement and to establish a trust account 
for the benefit of the ceding insurer, and 
specifying what the agreement is to cover; 

(B) Stipulate that assets deposited in the trust 
account shall be valued according to their 
current fair market value and shall consist only 
of cash (United States legal tender), certificates 
of deposit (issued by a United States bank and 
payable in United States legal tender), or 
investments of the types permitted by G.S. 58. 
Article 2 21 any combination of the above; 
provided that such investments are issued by 
an entity that is not the parent, subsidiary, or 
affiliate of either the grantor or the benefi- 
ciary. The reinsurance agreement may further 
specify the types of investments to be depos- 
ited. Where a trust agreement is entered into 
in conjunction with a reinsurance agreement 
covering risks other than life, annuities, and 
accident and health, the trust agreement may 
contain the provisions required by this para- 
graph in lieu of including such provisions in 
the reinsurance agreement; 

(C) Require the assuming insurer, prior to deposit- 
ing assets with the trustee, to execute assign- 
ments or endorsements in blank; or to transfer 
legal title to the trustee of aU shares, obliga- 
tions, or any other assets requiring assign- 
ments, in order that the ceding insurer, or the 
trustee upon the direction of the ceding in- 
surer, may whenever necessary negotiate these 
assets without consent or signature from the 
assuming insurer or any other entity; 



(D) Require that all settlements of account between 
the ceding insurer and the assuming insurer be 
made in cash or its equivalent; and 

(E) Stipulate that the assuming insurer and the 
ceding insurer agree that the assets in the trust 
account, established pursuant to the provisions 
of the reinsurance agreement, may be with- 
drawn by the ceding insurer at any time, 
notwithstanding any other provisions in the 
reinsurance agreement; and shall be utilized 
and a pplied by the ceding insurer or its succes- 
sors in interest by operation of law, including 
any liquidator, rehabilitator. receiver, or 
conservator of such company, without diminu- 
tion because of insolvency on the part of the 
ceding insurer or the assuming insurer, only 
for the following purposes: 

(i} To reimburse the ceding insurer for the 
assuming insurer's share of premiums 
returned to the owners of policies rein- 
sured under the reinsurance agreement 
because of cancellations of such policies; 
(ii) To reimburse the ceding insurer for the 
assuming insurer's share of surrenders and 
benefits or losses paid by the ceding in- 
surer pursuant to the provisions of the 
policies reinsured under the reinsurance 
agreement; 
(iii) To fund an account with the ceding insurer 
in an amount at least equal to the deduc- 
tion, for reinsurance ceded, from the 
ceding insurer liabilities for policies ceded 
under the agreement. The account shall 
include, but not be limited to. amounts for 
policy reserves, claims and losses incurred 
(including losses incurred but not re- 
ported), loss adjustment expenses, and 
unearned premium reserves; and 
(iv) To pay any other amounts the ceding 
insurer claims are due under the reinsur- 
ance agreement. 
(2) The reinsurance agreement may also contain 
provisions that: 
(A) Give the assuming insurer the right to seek 
approval from the ceding insurer to withdraw 
from the trust account all or any part of the 
trust assets and transfer those assets to the 
assuming insurer, provided: 
(i) The assuming insurer shall, at the time of 
withdrawal, replace the withdrawn assets 
with other qualified assets having a market 
value equal to the market value of the 
assets withdrawn so as to maintain at all 
times the deposit in the required amount. 
or 
(ii) After withdrawal and transfer, the market 
value of the trust account is no less than 



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102 percent of the required amount. 
The ceding insurer shall not unreasonably or 
arbitrarily withhold its a pproval. 

(B) Provide for: 

(i) The return of an^ amount withdrawn in 
excess of the actual amounts required for 
Subparts fd'XlKE'Xi). (ii) and (iii), or in 
the case of Subpart ('d')(n(E)(iv) of this 
Rule, any amounts that are subsequently 
determined not to be due; and 

(ii) Interest payments, at a rate not in excess 
of the prime rate of interest, on the 
amounts held pursuant to Subpart 
(dXlKE'Xiii) of this Rule. 

(C) Permit the award by any arbitration panel or 
court of competent iurisdiction of: 

(i) Interest at a rate different from that pro- 
vided in Subpart (d)(2¥BUii) of this Rule, 
(ii) Court of arbitration costs. 
(iii) Attorney's fees, and 
(iv) Any other reasonable expenses. 

(3) Financial reporting. A trust agreement may be 
used to reduce any liability for reinsurance 
ceded to an unauthorized assuming insurer in 
financial statements required to be filed with the 
Department in compliance with the provisions of 
this Rule when established on or before the date 
of filing of the financial statement of the ceding 
insurer. Further, the reduction for the existence 
of an acceptable trust account may be ug to the 
current fair market value of acceptable assets 
available to be withdrawn from the trust account 
at that time, but such reduction shall be no 
greater than the specific obligations under the 
reinsurance agreement that the trust account was 
established to secure. 

(4) Existing agreements. Notwithstanding the 
effective date of this Rule, any trust agreement 
in existence before January l^ 1996, will con- 
tinue to be acceptable until June 30, 1996, at 
which time the agreements will have to be in full 
compliance with this Rule for the trust agree- 
ment to be acceptable. 

(5) The failure of any trust agreement to specifically 
identify the beneficiary as defined in Paragraph 
(a) of this Rule shall not be construed to affect 
any actions or rights that the Commissioner may 
take or possess pursuant to the provisions of the 
laws of this State. 

Statutory Authority G.S. 58-2-40; 58-7-21; 58-7-26. 

.0505 LETTERS OF CREDIT 

(a) As used in this Rule: 
(1) "Beneficiary" means the domestic insurer for 



whose benefit the letter of credit has been estab- 



lished and any successor of the beneficiary by 



operation of law. If a court of law a ppoints a 
receiver as successor in interest to the named 
beneficiary, then the named beneficiary is the 
court-appointed domiciliary conservator, rehabil- 
itator. or liquidator. 
(2) "Financial Institution" means a qualified United 
States financial institution as defined in G.S. 58- 
7-26(c). 

(b) In order to qualify under G.S. 58-7-26(a)(3). a letter 
of credit must be clean, irrevocable, unconditional and 
issued or confirmed by a qualified United States financial 
institution as defined in G.S. 58-7-26(b). The letter of 
credit shall contain an issue date and date of expiration and 
shall stipulate that the beneficiary need only draw a sight 
draft under the letter of credit and present it to obtain funds 
and that no other document need be presented. The letter 
of credit shall indicate that it is not subject to any condition 
or qualifications outside of the letter of credit. The letter of 
credit itself shall not contain reference to any other agree- 
ments, documents, or entities, except as provided in 
Subparagraph (h)(1) of this Rule. 

(c) The heading of the letter of credit may include a 
boxed section that contains the name of the applicant and 
other a ppropriate notations to provide a reference for the 
letter of credit. The boxed section shall be clearly marked 
to indicate that such information is for internal identification 
purposes only. 

(d) The letter of credit shall contain a statement to the 
effect that the obligation of the qualified United States 
financial institution under the letter of credit is in no way 
contingent upon reimbursement with respect thereto. 

(e) The term of the letter of credit shall be for at least 
one year and shall contain an "evergreen clause" which 
prevents the expiration of the letter of credit without due 
notice from the issuer. The "evergreen clause" shall 
provide for a period of not less than thirty 30 days' notice 
before the expiration or non-renewal date. 

(f) The letter of credit shall state whether it is subject to 
and governed by the laws of this State or the Uniform 
Customs and Practice for Documentary Credits of the 
International Chamber of Commerce (Publication 400), and 
a]] drafts drawn thereunder shall be presentable at an office 
in the United States of a qualified United States financial 
institution. 

(g) If the letter of credit is made subject to the Uniform 
Customs and Practice for Documentary Credits of the 
International Chamber of Commerce (Publication 400); then 
the letter of credit shall specifically address and make 
provision for a extension of time to draw against the letter 
of credit in the event that one or more of the occurrences 
specified in Article 19 of Publication 400 occur. 

(h) The letter of credit shall be issued or confirmed by a 

qualified United States financial institution authorized to 

issue letters of credit, pursuant to G.S. 58-7-26(c). 

(i) Reinsurance agreement provisions: 

(1) The reinsurance agreement in conjunction with 

which the letter of credit is obtained may contain 



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PROPOSED RULES 



provisions that: 

(A) Require the assuming insurer to provide letters 
of credit to &e ceding insurer and specify what 
they are to cover. 

(B) Stipulate that the assuming insurer and ceding 
insurer agree that the letter of credit provided 
by the assuming insurer pursuant to the provi- 
sions of the reinsurance agreement may be 
drawn upon at anx time, notwithstanding any 
other provisions in die agreement, and shall be 
utilized by the ceding insurer or its successors 
in interest only for one or more of the follow- 
ing reasons: 

(i) To reimburse the ceding insurer for the 
assuming insurer's share of premiums 
returned to the owners of policies rein- 
sured under the reinsurance agreement on 
account of cancellations of such policies; 
(ii) To reimburse the ceding insurer for the 
assuming insurer's share of surrenders and 
benefits or losses paid by the ceding in- 
surer under the terms and provisions of the 
policies reinsured under the reinsurance 
agreement; 
(iii) To fund an account with the ceding insurer 
in an amount at least equal to the deduc- 
tion, for reinsurance ceded, from the 
ceding insurer's liabilities for policies 
ceded under the agreement (such amount 
shall include, but not be limited to. 
amounts for policy reserves, claims and 
losses incurred and unearned premium 
reserves); and 
(iv) To pay any other amounts the ceding 
insurer claims are due under the reinsur- 
ance agreement. 
(O All of the provisions of Subparagraph (U of 
this Paragraph shall be applied without diminu- 
tion because of insolvency on the part of the 
ceding insurer or assuming insurer. 

(2) Nothing contained in Subparagraph (1) of this 
Paragraph shall preclude the ceding insurer and 
assuming insurer from providing for: 

(A) An interest payment, at a rate not in excess of 
the prime rate of interest, on the amounts held 
pursuant to Subaragraph (l)(B)(iii) of this 
Paragraph; or 

(B) The return of any amounts drawn down on the 
letters of credit in excess of the actual amounts 
required for the above or. in the case of 
Subpart (l)(B)(iv) of this Paragraph, any 
amounts that are subsequently determined not 
to be due. 

(3) When a letter of credit is obtained in conjunction 
with a reinsurance agreement covering risks 
other than life, annuities, and accident and 
health, where it is customary practice to provide 



a letter of credit for a specific purpose, then the 

reinsurance agreement may, in lieu of Part 

(DrS) of this Paragraph, require that the parties 

enter into a "Trust Agreement" . which may be 

incorporated into the reinsurance agreement or 

be a separate document. 

(i) A letter of credit may not be used to reduce any 

hability for reinsurance ceded to an unauthorized assuming 

insurer in financial statements filed with the Department 

unless an acceptable letter of credit with the filing ceding 

insurer as beneficiary has been issued on or before the date 

of filing of the financial statement. The reduction for the 

letter of credit may be ug to the amount available under the 

letter of credit but no greater than the specified obligation 

imder the reinsurance agreement that the letter of credit was 

intended to secure. 

Statutory Authority G.S. 58-2-40; 58-7-26. 

SUBCHAPTER IID - PROXY: LIQUIDATION 
AND MERGER 

SECTION .0100 - GENERAL PROVISIONS 

.0108 NOTICE OF HEARING ON PLAN 

OF EXCHANGE OF CAPITAL STOCK 

Notioo of a public h e aring upon tho t e rmo, oonditiono and 
provisions of a plan of oxohongo of capital otook shall bo 
publiflhod and mailod in aocordanoo with tho proviflionfl of 
G.S. 5 8 9 5. 

Statutory Authority G.S. 58-2-40; 58-9-5. 

.0109 CHARGES FOR HEARING 

CONDUCTED PURSUANT TO 
G.S. 58-9-5 

Tho costs of a public hoaring, and tho dopartmont' s 
pr e Uminar>' work r e lative thoroto, oholl b e aooooood upon the 
p e tition e ro on th e baaio opeoifiod in th e plan of exchang e for 
any oxpnansoQ incurrod thorofor. — Tho Dopartmont will bo 
roimburood for the total numbor of man days oxpondod for 
preliminai^^ work and for the actual h e aring and th e amount 
charg e d shall be at tho som e rat e ohargod to inouranoo 
companies for tho examination of thoir books and rooords. 

Statutory Authority G. S. 58-2-40; 58-9-5. 

SECTION .0300 - MERGER: GENERAL 
NATURE 

.0302 PROCEDURE FOR SUBNflSSION 
OF PLAN OF MERGER - STOCK 
COMPANY 

A plan of m e rg e r or oonsolidation of a dom e otio otook 
company must be prepar e d in aooordano e with th e general 
business laws of North Carolina and must bo submittod 
under petition to tho Commissionor, in accordanco with tho 



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PROPOSED RULES 



provioiona of G.S. 5 8 7 150, who will sohodulo a public plan. — Notioo ghall oIbo bo publiohod by tho domo s tic 
hoaring on the plan and ioouo on order boo e d on hio find oompanioo onoo a w ee k for hvo oono e outive ^ ^ 'ooko with the 

ing 6 . — Any order ioouod by the Commiooionor approving loot publioation date not l e os than 30 dayo b e for e the date of 



such plan will make no appraioal of of oxprooa any opinion 
with roapoct to tho valuoo of shoroo of atock or tho rates of 



the hearing and shall bo publiohod in tho major morning 
nowspapora in tho Citioe of Wilmington, Raleigh, Groono 



exohangeo of ohoroo of otook of th e m e rging or oonoolidating boro, Charlott e and Aoh e villo, North Carolina and oitios 



oompanioo and will in every inotono e bo oubjaot to th e 
approval of the otockholdors of tho companioa ao required by 

Statutory Authority G.S. 55-107 et seq.; 58-2-40; 58-7-150. 

.0303 NOTICE OF PUBLIC HEARING ON 
PLAN OF MERGER FOR STOCK 
COMPANIES 

Written notice of tho public hoaring on a plan of morger 
or conaolidation ahall bo given to tho atockholdora of tho 
merging or oonoolidating oompanioB at l e ast 20 dayo b e for e .0202 



tho dat e of th e h e aring. 

In addition, notice ahall bo publiahod by tho domootio 
companioa onoo a wook for iwo consocutivo wooka with tho 
laot publioation date not l e oo than 20 dayo b e for e th e dat e of 
th e h e aring and ohall bo publioh o d in th e major morning 
nowapapors in tho Citioa of Wilmington, Raleigh, Groona 
boro, Charlotte, and Aohevillo, North Carolina, and the 
location of th e principal offioo of tho domootio oompani e a, 
if oth e r than th e aforem e ntion e d. 

Both written and publiohod notice ahall bo in a form ao 
proacribod by tho Commi s aionor. 

Statutory Authority G.S. 58-2-40; 58-7-150. 

.0304 PROCEDURE FOR SUBMISSION 

OF PLAN OF MERGER - MUTUAL 
COMPANY 

A plan of morgor of conaolidation of a domoatic mutual 
company must bo prepared in acoordanco with tho general 
buoineoo lawo of North Carolina and muot be oubmitted 
und e r p e tition to the Commiasion e r, in acoordano e with th e 
provisions of G.S. 5 8 7 150, who will schedule a public 
hoaring on tho plan at a date aub s oquont to tho date of tho 
sp e cial mooting of policyhold e r s of th e m e rging or oonooli 
dating domootio mutual company. — If th e plan io adopt e d by 
tho policyholdors at tho apocial mooting of policyholders by 
vote of two thirds of tho mombora voting thereon, tho 
Commiooion e r ohall continue with tho public h e aring and 
isouo an order baaed on his findings. 

Statutory Authority G.S. 58-2-40; 58-7-150. 

.0305 NOTICE OF PUBLIC HEARING ON 
PLAN OF MERGER FOR MUTUAL 
COMPANIES 

Written notiooo of th e dat e , tim e and plac e of th e public 
h e aring on a plan of m e rg e r or oonoolidation of a dom e otic 
mutual company ahall bo included in tho notice of tho 
special mooting of the policyholdors called to vote on said 



wh e r e in th e principal offio e o of th e dom e otic oompanioo ar e 
located, if other than tho aforementioned . — Publiahod notioo 
ahall bo in a form as proacribod by the Commiaaione pr 

Statutory Authority G.S. 58-2-40; 58-7-150. 

CHAPTER 14 - ADMISSION REQUIREMENTS 

SECTION .0200 - FORMATION OF 
DOMESTIC INSURANCE COMPANY 



INFORMATION REQUIRED AFTER 
ORGANIZATIONAL MEETING 

In accordance with the procedures established by G.S. 
58-7-40, the following infonnatlon must be submitted to 
the commissioner for approval prior to the issuance of a 
certificate of authority to a newly organized company: 

(1) a certificate of proceedings of the organizational 
meeting setting forth a copy of the articles of 
incorporation with the names of the subscribers 
thereto; the date of the first meeting and of any 
adjournments thereof; certified copies of the 
minutes of the meeting; certified copies of the 
bylaws; an opening balance sheet of the corpo- 
ration's books and records and confirmation of 
the initial capitalization funds in escrow or 
otherwise, for the company; and 

(2) duly prepared and executed forms furnished by 
the commissioner as follows: 

(a) check sheet and analysis of application for 
admission in the form described in 11 NCAC 
14 .0414; 

(b) application for license in the form described 
in 11 NCAC llA .0404 for life, aooidont and 
h e alth, and firo and oosuolty insurono e oompa 
ni e a; 11 NCAC 11 A .0 4 07 for fratomal or 
d e ro; 11 NCAC llA .0 4 05 for hospital and 
m e dioal s e rvio e oorporations; and 1 1 NCAC 
HA .0 4 06 for d e ntal sorvioo oorporations; in 
11 NCAC 14 .0432: 

(c) petition for admission to do business in North 
Carolina in the form described in 1 1 NCAC 
14 .0415; 

(d) power of attorney for services of legal process 
in the form described in 1 1 NCAC 14 .0416; 
and 

(e) power of attorney to sell securities on deposit 
in the form described in 1 1 NCAC 14 .0417. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1512 



PROPOSED RULES 



Statutory Authority G.S. 58-2-40; 58-5-30; 58-7-35; 
58-7-40; 58-16-30; 58-65-50. 

SECTION .0400 - DESCRIPTION OF 
FORMS 

.0430 ANNUAL GROSS PREMIUM 

TAX RETURN FOR PURCHASING 
GROUPS 

The i\nnual Gross Premium Tax Return for Purchasing 
Groups i s the form for filing and remitting annual 
premium taxoo by purchasing groups rcgiatorod to do 
business in North Carolina under the federal and North 
Carolina risk retention laws. 

Statutory Authority G.S. 58-22-35(h). 

.0431 ANNUAL GROSS PREMIUM 
TAX RETURN FOR RISK 
RETENTION GROUPS 

The j\nnual Gross Premium Tax Return for Risk 
Retention Groups is the form for filing and remitting 
annual premium taxes by risk retention groups registered 
to do business in North Carolina under the federal and 
North Carolina risk retention laws. 

Statutory Authority G.S. 58-22-20(3). 

.0432 APPLICATION FOR LICENSE: 
INSURANCE COMPANY 

The application for license is a form used by an insurance 
company to request authority to transact specific lines of 
insurance business in North Carolina. This form is used for 
initial authority by each applicant insurance company and 
for an annual renewal license by each licensed insurance 
company. The form includes the company's name, 
company's address, president and secretary of the company. 
a schedule of license fees, and the lines of authority being 
requested. 

Statutory Authority G.S. 58-2-40; 58-7-40; 58-16-5. 



SECTION .0600 - SURPLUS LINES 



.0603 



FINANCIAL INFORMATION 
REQUIRED 

Each request for surplus lines eligibility shall be accompa- 
nied by the following financial information so that verifica- 
tion of compliance with the eligibility requirements can be 
made: 

annual statements for the preceding two years in 
the form required under G.S. 58-2-165 for compa- 
nies licensed in at least one state in the United 
States; 

annual fmancial reports for the preceding two 
years in the English language and in U.S. dollar 



(1) 



(2) 



amounts for alien insurance companies; 

(3) a certified copy of the latest report on examination 
or, if the company is not required to be examined 
by any jurisdiction, a copy of the latest CPA 
report and management letter; 

(4) actuarial certification of the loss reserves and loss 
adjustment expense reserves for the most recent 
year if such certification is available; aad 

(5) a copy of the NAIC fmancial ratio (IRIS) results 
for the most recent year, along with an explana- 
tion for any unusual values if such tests are per- 
formed; and 

(6) an alien insurer must file a copy of its United 
States trust agreement; and must also file with and 
be approved by the Nonadmitted Insurers Informa- 
tion Office of the NAIC to be considered for 
eligibility in North Carolina. 

Statutory Authority G.S. 58-2-40; 58-2-165; 58-21-20. 

SECTION .0700 - FEDERAL RISK 
RETENTION ACT ENTITIES 

.0705 FILCVG AND PA'iTVIENT OF 
PREMIUM TAXES 

(a) Each risk retention group registered to transact 
business in North Carolina shall file with the Secretary of 
Revenue. ConnruBBionor, on or before March 15 of each 
year, a report of all premiums paid to it for risks insured 
within North Carolina. Carolina in the form d e oorib e d in 1 1 
NCAC U .0^31. 

(b) Each purclmaing group rogistorod to transact businoas 
in North Carolina shall file with the Commissionor, on or 
b e fore March 15 of oaoh y a ar, a report of all promiumo pai d 
to it for riokfl intmr e d within th e state in the form dooori teed' 
in 11 NCAC 11 .0130. 

Statutory Authority G.S. 58-22-20; 58-22-35. 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the N.C. Department of Insurance 
intends to amend rules cited as 11 NCAC 13 .0317 and 
.0319. 

Proposed Effective Date: February 1, 1996. 

A Public Hearing will be conducted at 10:00 a.m. on 
November 28, 1995 at the Dobbs Building, 3rd Floor 
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611. 

Reason for Proposed Action: Necessary to be in compli- 
ance with statute changes made during the last session of the 
General Assembly. 

Comment Procedures: Written comments and questions 



1513 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



should be directed to Fred Mohn, 430 N. Salisbury Street, 
Raleigh, NC 27611, (919) 733-2200. Oral presentations 
may be made at the public hearing. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of local government or state funds. 

CHAPTER 13 - SPECIAL SERVICES DIVISION 

SECTION .0300 - INSURANCE PREMIUM 
FINANCE COMPANIES 

.0317 TEN-DAY NOTICE 

The ten-day written notice of intent to cancel as described 
in Gonoral Statute 5 8 60(1) G.S. 58-35-85(1) shall include 
the name and address of the premium finance company, the 
premium finance agreement number, the date the notice is 
mailed, the amount of the installment in default and all other 
pertinent information. A copy of the ten-day notice, or a 
listing of delinquent insureds showing the same general 
information shall be mailed sent to the insurance agent 
shown on the premium finance agreement at the same time 
notice is given to the insured. 

Statutory Authority G.S. 58-2-40; 58-35-85(1). 

.0319 EFFECTIVE DATE OF CANCELLATION 

When an insurance premium finance company cancels an 
insurance policy by using a power of attorney signed by the 
insured, the effective date of cancellation as stated in the 
notice of cancellation shall be no earlier than the date the 
notice of cancellation is mail e d sent to the insurance 
company. 

Statutory Authority G.S. 58-2-40; 58-35-85(2). 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the N.C. Department of Insurance 
intends to amend rule cited as 11 NCAC 16 .0602. 

Proposed Effective Date: February 1, 1996. 

A Public Hearing will be conducted at 10:00 a.m. on 
November 28, 1995 at the Dobbs Building, 3rd Floor 
Hearing Room, 430 N. Salisbury Street, Raleigh, NC 27611. 

Reason for Proposed Action: Necessary to comply with 
changes made during the last session of the General Assem- 
bly. 

Comment Procedures: Written comments and questions 
should be directed to Walter James, 430 N. Salisbury Street, 
Raleigh, NC 27611, (919) 733-3284. Oral presentations 
may be made at the public hearing. 



Fiscal Note: This Rule does not affect the expenditures or 
revenues of local government or state funds. 

CHAPTER 16 - ACTUARIAL SERVICES DIVISION 

SECTION .0600 - HEALTH MAINTENANCE 
ORGANIZATION FILINGS AND STANDARDS 

.0602 HMO GENERAL FILING REQUIREMENTS 

(a) All schedules of premiums for enrollee coverage for 
health care services and amendments to schedules of 
premiums that are filed with the Department shall be 
submitted to and stamped received by the Life and Health 
Division and indicate whether the filing is an original or 
amended filing. All data requirements prescribed by this 
Section must be submitted within 30 days after the date that 
the filing is stamped received, or the filing will be deemed 
to be disapproved. Subsequent data submissions for rate 
filings deemed to be in non-compliance with this Section 
shall be made directly to the Department's Actuarial 
Services Division within the 30 day period. 

(b) All filings shall be accompanied by: 

(1) A certification by aa a qualified actuary that the 
premiums applicable to an enrollee are not 
individually determined based on the status of 
his health and that such premiums are estab- 
lished in accordance with actuarial principles for 
various categories of enrollees and are not 
excessive, inadequate, or unfairly discrimina- 
tory. 

(2) Actuarial data supporting the schedule of premi- 
ums as prescribed by 11 NCAC 16 .0603, 11 
NCAC 16 .0604, 11 NCAC 16 .0605, 11 
NCAC 16 .0206 and 11 NCAC 16 .0207. 

(c) All data and schedules that are required to be filed by 
this Section shall be filed in duplicate. 

(d) As used in Paragraph (b) of this Rule, "qualified 
actuary" means an individual who is an Associate or Fellow 
of tlie Society of Actuaries or a Member of the American 
Academy of Actuaries and has at least three years of 
substantive experience in the HMO or another managed 
health care field. 

Statutory Authority G.S. 58-2-171; 58-67-50(b); 58-67-150. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1514 



PROPOSED RULES 



TITLE ISA - DEPARTMENT OF ENVIRONMENT, HEALTH, AND NATURAL RESOURCES 

Notice is hereby given in accordance with G. S. 150B-21. 2 that the EHNR - Environmental Management Commission 
intends to amend rule cited as ISA NCAC 2B .0304. Text shown in italics has been adopted by the EMC and is pending 
approval by the Rules Review Commission. Proposed effective date for the text in italics is January 1, 1996. 

Proposed Effective Date: April 1, 1996. 

A Public Hearing will be conducted at 7:00 p.m. on December 5, 1995 at the Mountain Horticulture Crops Resource and 
Extension Center, 2016 Fanning Bridge Road, Fletcher, North Carolina. 

Reason for Proposed Action: 

NORTH CAROLINA ENVIRONMENTAL MANAGEMENT COMMISSION 

ANNOUNCEMENT OF RULE-MAKING TO RECLASSIFY THE LOWER AND UPPER FRENCH BROAD 
RIVERAND THE MILLS RIVER IN BUNCOMBE, HENDERSON AND TRANSYLVANIA COUNTIES 

TTie N.C. Department of Environment, Health, and Natural Resources on behalf of the Environmental Management 
Commission (EMC) will conduct a public hearing in order to receive public comments on a proposal to reclassify two 
sections of the French Broad River (referred to as the "lower" and "upper" French Broad River) and one section of the Mills 
River in Buncombe, Henderson and Transylvania Counties. 



PROPOSAL: 



LOWER FRENCH BROAD RIVER 



Affected Area: 

Current Class: 

Proposed Class: 

Affected Local 
Governments: 

Summary: 



PROPOSAL: 
Affected Area: 



Current Class: 



French Broad River from Mills River to a point 0. 1 miles upstream of the Boring Mill Branch, 
including tributaries (French Broad River Basin) 

WS-IV and WS-IV CA (Critical Area) 

C 

Buncombe and Henderson Counties, the Town of Fletcher, and the City of Asheville 

This section of the French Broad River, currently designated as a WS-IV water supply, is 
approximately 67,803 acres in size and is located in Buncombe and Henderson Counties. The 
Asheville-Buncombe Water Authority and Henderson County requested this area be reclassified 
from its current WS-IV water supply classification to a nonwater supply classification. This 
section of the French Broad is no longer planned for use as a drinking water supply source by the 
local governments. Four local governments have land use authority within the watershed. They 
are the Town of Fletcher, the City of Asheville, and Buncombe and Henderson Counties. The 
proposed Class C reclassification would remove the current drinking water supply WS-IV 
classification and the requirements for the Town of Fletcher, the City of Asheville and Buncombe 
and Henderson Counties to continue implementing drinking water supply ordinances for this 
section of the French Broad River. The classification will continue to protect all uses other than 
water supply, including protection as swimmable and fishable waters. 

UPPER FRENCH BROAD RIVER 

French Broad River from 0.5 miles downstream of Little River to a point 0.6 miles upstream of 
Mills River, including tributaries, is proposed as WS-IV. The French Broad River from 0.6 miles 
upstream of the Mills River to Mills River, including tributaries, is proposed as WS-IV CA 
(French Broad River Basin) 

C and WS-IV 



1515 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



Proposed Class: 



WS-IV and WS-IV CA (Critical Area) 



I 



Affected Local 
Goyemments: 

Summary: 



I 



The Town of Laurel Park, and Henderson and Transylvania Counties 

This section of the French Broad River drainage area is approximately 40,982 acres in size and 
is located in Henderson and Transylvania Counties. The Asheville-Buncombe Water Authority 
and Henderson County requested this area be reclassified as WS-IV to protect its use for drinking 
water supply purposes. Three local governments have land use authority within this area. They 
are the Town of Laurel Park, and Henderson and Transylvania Counties. The proposed 
reclassification to Classes WS-IV and WS-IV CA would require these local governments to adopt 
and implement drinking water supply ordinances for this section of the French Broad River that, 
at a minimum, meet the state's requirements. In turn, the state will not allow new landfills or 
residual application sites within the Critical Area. New industrial wastewater discharges within 
the Critical Area will also be required to meet more stringent effluent discharge limits. NOTE: 
A section of this area (from Mills Pond Creek to the Mills River) is already classified as WS-IV 
due to the overlap of the lower French Broad River. However, the section from 0.6 miles 
upstream of Mills River to Mills River would change from WS-IV to WS-IV CA. 
The following chart summarizes the requirements related to the WS-FV water supply classification. 
These are the major provisions of the water supply regulation (15A NCAC 2B .0100, and .0200); 
to review all of them, write or call the contact pterson listed at the end of this announcement for 
more information. Local governments may adopt and implement more protective ordinances to 
protect the drinking water supply source, if they choose to do so. 

Requirements for a WS-IV Classification 

Development Criteria 
W/O Engineered W/Engineered 



PROPOSAL: 





Wastewater 


Stormwater Mgmt., Stormwater Mgt., 


10%/70% 




Dischargers 


Low Density Opt. Hiph Density Opt. 


Provision 


Critical Area 


Domestic & 


2du*/acre or up to 24-50% built upon 


Not 




Industrial (1) 


24 % built upon area (2) 
area (2) 


Allowed 


Protected 


Domestic & 


2du*/acre or up to 24-70% built upon 


Allowed 


Area 


Industrial 


24% built upon area (2,3) 
area (2,3) 




itled "Notes" 


for additional information on these requirements. 






MILLS RIVER 







^ 



Two options are proposed for the lower section of the Mills River. The Asheville-Buncombe 
Water Authority and Henderson County requested that the lower section of the Mills River be 
reclassified as WS-II. However, the state uses a system of examining the types of permitted 
wastewater discharges and the current land use within the proposed affected area to determine the 
most appropriate classification. This information is compared with the water supply watershed 
protection rules in order to propose a water supply classification. The size of the affected area 
is also considered. 

The Division of Environmental Management's records indicate the presence of four domestic 
wastewater discharges in this section of the Mills River. The presence of these wastewater 
discharges qualifies this section of the river for a WS-HI classification. Since the Authority and 
County requested a WS-II classification, we are requesting comments on the following two 
options: a WS-II or a WS-III classification for this section of the Mills River. The Mills River, 
upstream of the City of Hendersonville's water supply intake, is already classified as a WS-II and 
WS-I and is not affected by this proposal. 

Option Ml 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1516 



PROPOSED RULES 



Affected Area: 

Current Class: 

Proposed Class: 

Affected Local 
Governments: 

Summary: 



Mills River from the City of Hendersonville's water supply intake to a point 0.7 miles upstream 
of the mouth of Mills River, including tributaries, is prop>osed as WS-HI, and from a p>OLnt 0.7 
rmles upstream of the mouth of the Mills River to the French Broad River is projxjsed as WS-HI 
CA 

WS-IV 

WS-m and WS-IH CA (Critical Area) 



Henderson County 

The section of the Mills River proposed for reclassification is approximately 1,629 acres in size 
and is located in Henderson County. Ninety-four acres of the total proposed affected area is 
Critical Area (CA). Henderson County has land use authority for this area. The pro|X)sed 
reclassification to Classes WS-IU and WS-IU CA would require local governments having land use 
authority for the area proposed for reclassification to adopt and implement drinking water supply 
ordinances that, at a minimum, meet the state's requirements. In turn, the state would restrict new 
permits for wastewater discharges to this section of the Mills River. Only those that qualify for 
a General Permit (for example, swimming pool filter backwash) would be allowed in the Critical 
Area and new domestic and non-process industrial wastewater (such as non-contact cooling water 
discharge) would be allowed in the remainder of the watershed area proposed for reclassification. 

The following chart summarizes the requirements related to the WS-UI water supply classification. 
These are the major provisions of the water supply regulation (15A NCAC 2B .0100, and .0200); 
to review all of them, write or call the contact person listed below for more information. Local 
governments may adopt and implement more protective ordinances to protect the drinking water 
supply source if they choose to do so. 

Requirements for a WS-III Classification 



Critical Area 



Balance of 
Watershed 



Wastewater 
Dischargers 
General 
Permits 

Domestic & 
Non-process 
industrial 



Development Criteria 
W/O Engineered W/Engineered 

Stormwater Mgmt., 
Low Density Opt. 
ldu*/acre or up to 
12% built upon area 



Stormwater Mgmt., 
High Density Opt. 
12-30% built upon 
area 



2du*/acre or up to 
24% built upon 
area 



24-50% built upon 
area 



10%/70% 
Provision 
Not 
Allowed 

Allowed 



Please see the secfion entitled "Notes" for additional information on these requirements. 

Option #2 



Affected Area: 

Current Class: 

Proposed Class: 

Affected Local 
Governments: 

Summary: 



Mills River from the City of Hendersonville's water supply intake to a point 0.7 miles upstream 
of th mouth of the Mills River, including tributaries, is proposed as WS-II, and from a ptoint 0.7 
miles upstream of Mills River to the French Broad River is proposed as WS-II CA 

WS-IV 

WS-U and WS-U CA (Critical Area) 

Henderson County 

The section of the Mills River proposed for reclassification is approximately 1,629 acres in size 



1517 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



» 



and is located in Henderson County. Ninety-four acres of the total proposed affected area is 
Critical Area (CA). Henderson County has land use authority for this area. The projxjsed 
reclassification to Classes WS-II and WS-II CA would require local governments having land use 
authority for the area proposed for reclassification to adopt and implement drinking water supply 
ordinances that, at a minimum, meet the state's requirements. In turn, the state would restrict new 
permits for wastewater discharges to this section of the Mills River to only those that qualify for 
a General Permit (for example, swimming pool filter backwash). The Environmental Management 
Commission (EMC) may "grandfather in" existing wastewater discharges, but these discharges 
may be required to meet more stringent effluent limits. 

The following chart summarizes the requirements related to the WS-II water supply classification. 
These are the major provisions of the water supply regulation (15A NCAC 2B .0104, and .0200); 
to review all of them, write or call the contact person listed below for more information. Local 
governments may adopt and implement more protective ordinances to protect the drinking water 
supply source if they choose to do so. 



Requirements for a WS-II Classification 
Development Criteria 







W/O Engineered 


W/Engineered 






Wastewater 


Stormwater Mgmt., 


Stormwater Mgmt., 


10%/70% 




Dischareers 


Low Density Opt. 


Hieh Densitv Opt. 


Provision 


Critical Area 


General 


ldu*/2 acres or up to 


6-24% built upon 


Not 




Permits 


6 % built upon area 


area 


Allowed 


Balance of 


General 


ldu*/acre or up to 


12-30% built upon 


Allowed 


Watershed 


Permits 


12% built upon area 


area 





Notes: 



I 



(1) 

(2) 
(3) 



Critical area is one-half mile and draining to water supply intakes in a river or stream. 

Protected Area is ten miles and draining to water supply intakes located in a river or stream. 

Requirements applicable to new development. Existing single family lots are exempt. 

Buffers required along all pereimial waters indicated on most recent versions of USGS 1:24,000 

scale topographic maps or as determined by local government studies; 30 foot buffer for low 

density and 100 foot buffer for high density development. 

Local governments will assume ultimate resp)onsibility for the operation and maintenance of 

stormwater management controls. 

10%/70% provision allows the use of 10% of each local government's jurisdiction within the 

watershed for new development and expansions to existing development up to 70% built-upon 

area, without stormwater controls, if using low density option throughout remainder of water 

supply. 

Residential development may apply dwelling units per acre or use percent built-upon surface area. 

Non-residential development must use percent built-upon surface area. 

Agricultural operations must maintain a ten foot vegetated buffer or equivalent control as 

determmed by the Soil and Water Conservation Commission in the Critical Area (this buffer is 

not required outside of the Critical Area). Animal operations deemed permitted under 15A NCAC 

2H .0200 are allowed in all water supply watersheds. 

New industrial process wastewater discharges are allowed but will require additional treatment 

requirements. (WS-IV) 

Applies only to projects requiring a Sediment/Erosion Control Permit. (WS-IV) 

1/3 acre lot or 36% built-upon area is allowed for projects without a curb and gutter street system. 

(WS-IV) 



PUBLIC INPUT: 



\ 



The purpose of this announcement is to encourage those interested in this proposal to provide 
comments. You may either attend the public hearing and make relevant verbal comments or 
submit written comments, data or other relevant information by January 5, 1996. The Hearing 
Officer may limit the length of time that you may speak at the public hearing, if necessary, so that 
all those who wish to speak may have an opportunity to do so. We encourage you to submit 
written comments as well. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1518 



PROPOSED RULES 



Public Hearing: Location: Mountain Horticulture Crops Resource & Extension Center 

2016 Fanning Bridge Road 

Fletcher, NC 



Date: 

Time: 



December 5, 1995 
7:00 p.m. 



Comment 
Procedure: 



It is very important that all interested and fXJtentiaUy affected persons or parties make their views 
known to the EMC whether in favor of or opposed to any and all provisions of the proposed water 
supply reclassification being noticed. THE EMC MAY, IN ACCORDANCE WITH N.C.G.S. 
150B-21.2, MAKE CHANGES IN FINAL RULES WITHOUT RENOTICE AS LONG AS THE 
ADOPTED RULES DO NOT DIFFER SUBSTANTIALLY FROM THE PROPOSED RULES. 
IN ACCORDANCE WITH THIS AUTHORITY, THE EMC MAY ADOPT HNAL MANAGE- 
MENT REQUIREMENTS OR RULES THAT ARE MORE OR LESS STRINGENT THAN 
THOSE BEING NOTICED IF THE EMC DETERMINES THAT THE HNAL ADOPTED 
RULES DO NOT DIFFER SUBSTANTIALLY FROM THE PROPOSED RULES. ALL 
INTERESTED AND POTENTIALLY AFFECTED PERSONS ARE STRONGLY ENCOUR- 
AGED TO READ THE ENTIRE ANNOUNCEMENT AND SUPPORTING INFORMATION, 
AND COMMENT ON THE PROPOSAL PRESENTED. The proposed effective date for final 
rules pursuant to this rule-making process is April 1, 1996. Written comments may be submitted 
to the person listed below. 



AUTHORITY: 



G.S. 143-214.1 Amendments to the Schedule of Classifications for the French Broad River Basin 
as referenced in 15A NCAC 2B .0304. 



ADDITIONAL 
INFORMATION: 



Further explanations and details of the proposed reclassification may be obtained by writing or 

calling: 



Steve Zoufaly 

DEHNR/Division of Enviroimiental Management 

P.O. Box 29535 

Raleigh, NC 27626-0535 

(919) 733-5083, extension 566 

Fiscal Note: This Rule ejects the expenditures or revenues of local government funds. A fiscal note was submitted to the 
Fiscal Research Division on September 11, 1995, OSBM on September 13, 1995. 



CHAPTER 2 - ENVmONTVIENTAL MANAGEMENT 

SUBCHAPTER 2B - SURFACE WATER 
STANDARDS: MONITORING 

SECTION .0300 - ASSIGNMENT OF STREAM 
CLASSinCATIONS 

.0304 FRENCH BROAD RIVER BASIN 

(a) Places where the schedules may be inspected: 
(1) Clerk of Court: 
Avery County 
Buncombe County 
Haywood County 
Henderson County 
Madison County 
Mitchell County 
Transylvania County 



Yancey County 
(2) North Carolina Department of Enviroimient, 
Health, and Natural Resources 
Asheville Regional Office 
Interchange Building 
59 Woodfin Place 
Asheville, North Carolina 

(b) Unnamed Streams. Such streams entering Tennessee 
will be classified "B." 

(c) Tlie French Broad River Basin Schedule of Classifica- 
tions and Water Quality Standards was amended effective: 

(1) September 22, 1976; 

(2) March 1, 1977; 

(3) August 12, 1979; 

(4) April 1, 1983; 

(5) August 1, 1984; 

(6) August 1, 1985; 

(7) February 1, 1986; 



1519 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



(8) May 1, 1987; 

(9) March 1, 1989; 

(10) October 1, 1989; 

(11) January 1, 1990; 

(12) August 1, 1990; 

(13) August 3, 1992; 

(14) October 1, 1993; 

(15) July 1, 1995; 

(16) November 1, 1995; 
a?) January 1. 1996: 
(18) April 1. 1996. 

(d) The Schedule of Classifications and Water Quality 
Standards for the French Broad River Basin was amended 
effective March 1, 1989 as follows: 

(1) Cataloochee Creek (Index No. 5-41) and all 
tributary waters were reclassified from Class 
C-trout and Class C to Class C-trout ORW and 
Class C ORW. 

(2) South Fork Mills River (Index No. 6-54-3) 
down to Queen Creek and all tributaries were 
reclassified from Class WS-I and Class 
WS-m-trout to Class WS-I ORW and Class 
WS-m-trout ORW. 

(e) The Schedule of Classifications and Water Quality 
Standards for the French Broad River Basin was amended 
effective October 1, 1989 as follows: Cane River (Index 
No. 7-3) from source to Bowlens Creek and all tributaries 
were reclassified from Class C trout and Class C to Class 
WS-m trout and Class WS-III. 

(0 The Schedule of Classifications and Water Quality 
Standards for the French Broad River Basin was amended 
effective January 1, 1990 as follows: North Toe River 
(Index No. 7-2) from source to Cathis Creek (Christ 
Branch) and all tributaries were reclassified from Class C 
trout and Class C to Class WS-m trout and Class WS-III. 

(g) The Schedule of Classifications and Water Quality 
Standards for the French Broad River Basin was amended 
effective August 3, 1992 with the reclassification of all 
water supply waters (waters with a primary classification of 
WS-I, WS-n or WS-ni). These waters were reclassified to 
WS-I, WS-U, WS-ni, WS-IV or WS-V as defined in the 
revised water supply protection rules, (15A NCAC 2B 
.0100, .0200 and .0300) which became effective on August 
3, 1992. In some cases, streams with primary classifica- 
tions other than WS were reclassified to a WS classification 
due to their proximity and linkage to water supply waters. 
In other cases, waters were reclassified from a WS classifi- 
cation to an alternate appropriate primary classification after 
being identified as downstream of a water supply intake or 
identified as not being used for water supply purposes. 

(h) The Schedule of Classifications and Water Quality 
Standards for the French Broad River Basin was amended 
effective October 1, 1993 as follows: Reasonover Creek 
[Index No. 6-38-14-(l)] from source to Reasonover Lake 
Dam and all tributaries were reclassified from Class B Trout 
to Class WS-V and B Trout, and Reasonover Creek [Index 
No. 6-38-14-(4)] from Reasonover Lake Dam to Lake Julia 



Dam and all tributaries were reclassified from Class C Trout 
to Class WS-V Trout. 

(i) The Schedule of Classifications and Water Quality 
Standards for the French Broad River Basin was amended 
effective July 1, 1995 with the reclassification of Cane 
Creek [Index Nos. 6-57-(l) and 6-57-(9)] from its source to 
the French Broad River from Classes WS-IV and WS-IV Tr 
to Classes WS-V, WS-V Tr and WS-IV. 

(j) The Schedule of Classifications and Water Quality 
Standards for the French Broad River Basin was amended 
effective November 1, 1995 as follows: North Toe River 
[Index Numbers 7-2-(0.5) and 7-2-(37.5)] from source to a 
point 0.2 miles downstream of Banjo Branch, including 
tributaries, has been reclassified from Class WS-III, WS-III 
Trout and WS-HI Trout CA (critical area) to Class WS-IV 
Trout, WS-IV, WS-IV Trout CA, and C Trout. 

(k) The Schedule of Classifications and Water Quality 
Standards for the French Broad River Basin was amended 
effective January 1 . 1996 as follows: Stokelv Hollow [Index 
Numbers 6-121. 5-(l) and 6-121. 5-(2)] from source to mouth 
of French Broad River has been reclassified from Class 
WS-H and Class WS-U CA to Class C. 

JT) The Schedule of Classifications and Water Quality 
Standards for the French Broad River Basin was amended 
April j_i 1996 with the reclassification of the French Broad 
River [Index No. 6-(l)1 from a point 0.5 miles downstream 
of Little River to Mill Pond Creek to Class WS-IV; French 
Broad River [Index No. 6-(5 1.5)1 from a point 0.6 miles 
upstream of Mills River to Mills River to Class WS-IV CA 
(Critical Area), from Mills River to a point 0.1 miles 
upstream of Boring Mill Branch to Class C; and the Mills 
River [Index No. 6-54-(5)1 as follows: 
Option Number \ 

From City of Hendersonville water supp ly intake 
to a point 0.7 miles upstream of mouth of Mills 
River to Class WS-III. and from a point 0.7 
miles upstream of mouth of Mills River to 
French Broad River to Class WS- m CA (Criti- 
cal Area). 
Option Number 2 

From City of Hendersonville water supp ly intake 
to a point 0.7 miles upstream of mouth of Mills 
River to Class WS-II. and from a point 0.7 
miles upstream of mouth of Mills River to 
French Broad River to Class WS-II CA (Critical 
Area). 



m 



m 



Statutory Authority 
143-21 5. 3 (a)(1). 



G.S. 143-214.1; 143-215.1: 



Notice is hereby given in accordance with G.S. 
150B-21.2 that the DEHNR - Environmental Manage- 
ment Commission intends to amend rules cited as ISA NCAC 
2D .0531, .0804 - .0805, .0901, .0917 - .0924, .0926 - 
.0928, .0934 - .0935, .0937, .0951, .0953 - .0954, .1301 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1520 



PROPOSED RULES 



- .1302, .1304; ISA NCAC 2Q .0401 - .0402; and repeal 
rules cited as ISA NCAC 2Q .0403 - .0418. 

Temporary: Rules ISA NCAC 2D .1301 - .1302, and 
.1304 were filed as temporary rules effective October 23, 
1995 for a period of 180 days or until the permanent rule 
becomes effective, whichever is sooner. 

Proposed Effective Date: April 1, 1996. 

A Public Hearing will be conducted at 7:00 p.m. on 
November 20, 1995 at the Archdale Building, Groundfloor 
Hearing Room, 512 N. Salisbury Street, Raleigh, North 
Carolina. 

Reason for Proposed Action: 

ISA NCAC 2D .0531, .0901 - Clarification on definition of 
Volatile organic compound allowing EPA 's definition to be 
adopted as found in the Code of Federal regulations. 
ISA NCAC 2D .0804 - .080S - To exempt military airfields 
and to rex'ise the definition of adjacent parking lots, decks, 
or garages. 

ISA NCAC 2D .0917 -.0924, .0928, .0934 - .093S, .0937, 
.0951, .0953 - .0954 - To clarify reasonably available 
control technology (RACT) ndes, to clarify and make minor 
revisions to Stage 1 and 11 rules. 

ISA NCAC 2D .0926 - .0927 - To prohibit the owner or 
operator of a bulk gasoline terminal or bulk gasoline plant 
from loading a gasoline truck tank or trailer that is not 
certified as complying with the vacuum-pressure require- 
ments. 

ISA NCAC 2D .1301 - .1302, .1304 - To remove the 
oxygenated gasoline requirement for the Raleigh/Durham 
Metropolitan Statistical Area. 

ISA NCAC 2Q .0401 - .0418 - To adopt the federal 
requirements for acid rain procedures by reference. 

Comment Procedures: All persons interested in these 

matters are invited to attend the public hearing. Any person 

desiring to comment for more than three minutes is requested 

to submit a written statement for inclusion in the record of 

proceedings at the public hearing. The hearing record will 

remain open until December 20, 1995, to receive additional 

written statements. Comments should be sent to and 

additional information concerning the hearing or the 

proposals may be obtained by contacting: 

Mr. Thomas C. Allen 

Division of Environmental Management 

P. O. Box 29580 

Raleigh, NC 27626-0580 

(919) 733-1489 (phone) 

(919) 733-1812 (fax) 

Fiscal Note: Rules ISA NCAC 2D .0804 - .0805 affect the 
expenditures or revenues of local government finds. 

Fiscal Note: Rules ISA NCAC 2D .0531, .0901, .0917 - 



.0924, 0926 - .0928 .0934 - .0935, .0937. .0951, .0953 - 
.0954, .1301 - .1302. .1304; 15 A NCAC 2Q .0401 - .0418 
do not qffea the expenditures or revenues of local govern- 
ment or state funds. 

SUBCHAPTER 2D - AIR POLLUTION CONTROL 
REQUIREMENTS 

SECTION .0500 - E>aSSION CONTROL 
STANDARDS 

.0531 SOURCES IN NON ATTAINMENT AREAS 

(a) Applicability. 

(1) Ozone Nonattainment Areas. This Rule applies 
to major stationary sources and major modifica- 
tions of sources of volatile organic compounds 
or nitrogen oxides for which construction com- 
mences after the area in which the source is 
located is designated Ln accordance with Part (A) 
or (B) of this Subparagraph and which are 
located in: 

(A) areas designated in 40 CFR 81.334 as 
nonattainment for ozone, or 

(B) any of the following areas and in that area 
only when the Director notices in the North 
Carolina Register that the area is in violation 
of the ambient air quality standard for ozone: 

(i) Charlotte/Gastonia, consisting of 

Mecklenburg and Gaston Counties; with 
the exception allowed under Paragraph (k) 
of this Rule; 
(ii) Greensboro/Winston-Salem/High Point, 
consisting of Davidson, Forsyth, and 
Guilford Counties and that part of Davie 
County bounded by the Yadkin River, 
Dutchmans Creek, North Carolina High- 
way 801, Fulton Creek and back to 
Yadkin River; or 
(iii) Raleigh/Durham, consisting of Durham 
and Wake Counties and Dutchville Town- 
ship in Granville County. 

Violations of the ambient air quality standard for 

ozone shall be determined in accordance with 40 

CFR 50.9. 

(2) Carbon Monoxide Nonattainment Areas. This 
Rule applies to major stationary sources and 
major modifications of sources of carbon mon- 
oxide located in areas designated in 40 CFR 
81.334 as nonattainment for carbon monoxide 
and for which construction commences after the 
area in which the source is located is listed in 40 
CFR 81.334 as nonattainment for carbon mon- 
oxide. 

(3) Redesignation to Attainment. If any county or 
part of a county to which this Rule applies is 
later designated in 40 CFR 81.334 as attainment 
for ozone or carbon monoxide, all sources in 



1521 



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November 1, 1995 



10:15 



PROPOSED RULES 



that county subject to this Rule before the redes- 
ignation date shall continue to comply with this 
Rule. 

(b) For the purpose of this Rule the definitions contained 
in 40 CFR 51.165(a)(1) and 40 CFR 51.301 shall apply. 
The reasonable period specified in 40 CFR 
51.165(a)(l)(vi)(C)(l) shall be seven years. 

(c) This Rule is not applicable to: 

(1) complex sources of air pollution that are regu- 
lated only under Section .0800 of this Subchap- 
ter and not under any other rule in this Subchap- 
ter; 

(2) emission of pollutants at the new major station- 
aiy source or major modification located in the 
nonattainment area which are pollutants other 
than the pollutant or pollutants for which the 
area is nonattainment. (A major stationary 
source or major modification that is major for 
volatile organic compounds or nitrogen oxides is 
also major for ozone.); 

(3) emission of pollutants for which the source or 
modification is not major; 

(4) a new source or modification which qualifies for 
exemption under the provision of 40 CFR 
51.165(a)(4); and 

(5) emission of compounds that are listed under 40 
CFR 51.100(s) as having been determined to 
have negligible photochemical reactivity except 
carbon monoxide, the following volatilo organic 
oompounde: 

(A) — oarbon monoxid e , 

(B) — carbon dioxide, 

(€) — carbonic acid, 

(&) — motallio oarbid e o or oarbonat e e, 

(E) — ammonium carbonat e , 

(F) — mothano, 

(G) — othano, 

(H^ — triohlorofluorom e thon e (ohlorofluorooarbon 



-W>T 



®- 



dichlorodifluoromothono (chlorofluorocorbon 

(J) — chlorodifluorom e than e (ohlorofluorooarbon 

22) 
(K) — trifluoromothano (fluorocarbon 23), 
(t^ — trichlorotrifluoroothono — (chlorofluorocorbon 



44^ 



(M)- 



diohlorototrafluoro e than e (ohlorofluorooarbon 
444)t 
(N) — chloropontafluoroothono — (ohlorofluorooarbon 

fO) — 1,1,1 triohloro e tbon e (m e thyl ohioroform), 

(P) — dichloromothano (mothylono chlorido), 

(Q) — dichlorotrifluoroothano 

(hydroohlorofluorooarbon 133), 
(R) — t e trafluoro e than e (hydrofluorooarbon 131a), 
fS) — dichlorofluoroothono (hydroohlorofluorooarbon 

■M4fe>r 



^f) — ohlorodifluoroothano (hydrochlorofluorocarbon 

142b)t 
(U) — 2 ohloro 1,1,1,3 t e trafluoro e than e 

(hydroohlorofluorooarbon 12 4 ), 
fV) — pontafluorootbano (hydrofluorooarbon 125), 
fW) — 1,1,3,3 t e trafluoro e than e (hydrofluorooarbon 

(X) — 1,1,1 trifluoroothono (hydrofluorooarbon 

1 4 3a), 
f¥) — 1,1 difluorooarbon (hydrofluorooarbon 153a), 



(Z) — porfluorooarbon compoundfl that fall into those 
olaasos! 

(4) oyolio) — branoh e dt — or lin e ar oomplotoly 

fluorinat e d alkanoo; 

(ii) cyolic, — branched, — or linear oomplotoly 

fluorinated othoro with no unoaturationo; 

(iii) oyolio, branched, — or linear compl e tely 

fluorinat e d — t e rtiary — amin e s — with — ae 
unBaturatione; and 

(iv) sulfur containing porfluorocarbona with no 

unoatumtionii and with eulfiir bondo only to 
oarbon and fluorine. 

(d) 15A NCAC 2Q .0102 and .0302 are not applicable to 
any source to which this Rule applies. The owner or 
operator of the source shall apply for and receive a permit 
as required in 15A NCAC 2Q .0300 or .0500. 

(e) To issue a permit to a source to which this Rule 
applies, the Director shall determine that the source will 
meet the following requirements: 

(1) The source will emit the nonattainment pollutant 
at a rate no more than the lowest achievable 
emission rate; 

(2) The owner or operator of the proposed new or 
modified source has demonstrated that all major 
stationary sources in the State which are owned 
or operated by this person (or any entity control- 
ling, controlled by, or under common control 
with this person) are subject to emission limita- 
tions and are in compliance, or on a schedule for 
compliance which is federally enforceable or 
contained in a court decree, with all applicable 
emission limitations and standards of this Sub- 
chapter which EPA has authority to approve as 
elements of the North Carolina State Implemen- 
tation Plan for Air Quality; 

(3) The source will obtain sufficient emission reduc- 
tions of the nonattainment pollutant from other 
sources in the nonattainment area so that the 
emissions from the new major source and 
associated new minor sources will be less than 
the emissions reductions by a ratio of at least 
1.00 to 1.15 for volatile organic compounds and 
nitrogen oxides and by a ratio of lesser than one 
to one for carbon monoxide. The baseline for 
this emission offset shall be the actual emissions 
of the source from which offset credit is ob- 



10:15 



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November 1, 1995 



1522 



PROPOSED RULES 



tained. Emission reductions must not include 
any reductions resulting from compliance (or 
scheduled compliance) with applicable rules in 
effect prior to the application. The difference 
between the emissions from the new major 
source and associated new minor sources of 
carbon monoxide and the emission reductions 
must be sufficient to represent reasonable further 
progress toward attaining the Ambient Air 
Quality Standards. The emissions reduction 
credits must also conform to the provisions of 40 
CFR 51.165(a)(3)(ii)(A) through (G); and 
(4) The North Carolina State Implementation Plan 
for Air Quality is being carried out for the 
nonattainjnent area in which the proposed source 
is located. 

(f) When a particular source or modification becomes a 
major stationary source or major modification solely by 
virtue of a relaxation in any enforceable limitation estab- 
lished after August 7, 1980, on the capacity of the source or 
modification to emit a pollutant, such as a restriction on 
hours of operation, then the provisions of this Rule shall 
apply to the source or modification as though construction 
had not yet begun on the source or modification. 

(g) To issue a permit to a source of a nonattainment 
pollutant, the Director shall determine, in addition to the 
other requirements of this Rule, that an analysis (produced 
by the permit applicant) of alternative sites, sizes, produc- 
tion processes, and environmental control techniques for 
source demonstrates that the benefits of the source signifi- 
cantly outweigh the environmental and social costs imposed 
as a result of its location, construction, or modification. 

(h) Approval of an application with regard to the require- 
ments of this Rule shall not relieve the owner or operator of 
the responsibility to comply fully with applicable provisions 
of other rules of this Chapter and any other requirements 
under local, state, or federal law. 

(i) When a source or modification subject to this Rule 
may affect the visibility of a Class I area named in Para- 
graph (c) of Rule .0530 of this Section, the following 
procedures shall be followed: 

(1) Tlie owner or operator of the source shall pro- 
vide an analysis of the impairment to visibility 
that would occur as a result of the source or 
modification and general commercial, industrial 
and other growth associated with the source or 
modification: 

(2) The Director shall provide written notification to 
all affected Federal Land Managers within 30 
days of receiving the permit application or 
within 30 days of receiving advance notification 
of an application. The notification shall be at 
least 30 days prior to the publication of the 
notice for public comment on the application. 
TTie notification shall include a copy of all 
information relevant to the permit application 
including an analysis provided by the source of 



the potential impact of the proposed source on 
visibility; 

(3) The Director shall consider any analysis con- 
cerning visibility impairment performed by the 
Federal Land Manager if the analysis is received 
within 30 days of notification. If the Director 
finds that the analysis of the Federal Land 
Manager fails to demonstrate to his satisfaction 
that an adverse impact on visibility will result in 
the Class I area, the Director shall provide in 
the notice of public hearing on the application, 
an explanation of his decision or notice as to 
where the explanation can be obtained; 

(4) TTie Director shall only issue permits to those 
sources whose emissions will be consistent with 
making reasonable progress towards the national 
goal of preventing any future, and remedying 
any existing, impairment of visibility in manda- 
tory Class I areas when the impairment results 
from man-made air fwllution. In making the 
decision to issue a permit, the Director shall 
consider the cost of compliance, the time neces- 
sary for compliance, the energy and nonair 
quality environmental impacts of compliance, 
and the useful life of the source; and 

(5) The Director may require monitoring of visibil- 
ity in or around any Class I area by the pro- 
posed new source or modification when the 
visibility impact analysis indicates possible 
visibility impairment. 

The requirements of this Paragraph shall not apply to 
nonprofit health or nonprofit educational institutions. 

(j) The version of the Code of Federal Regulations 
incorporated in this Rule is that as of January 1, 1989, and 
does not include any subsequent amendments or editions to 
the referenced material. 

fk) Paragraphs (e) and (g) of this Rule shall not apply to 
a new major stationary source or a major modification of a 
source of volatile organic compounds or nitrogen oxides for 
which construction commences after the area in which the 
source is located has been designated in accordance with 
Part (a)(1)(B) of this Rule and before the area is designated 
in 40 CFR 81.334 as nonattainment for ozone if the owner 
or operator of the source demonstrates, using the Urban 
Airshed Model (UAM), that the new source or modification 
will not contribute to or cause a violation. The model used 
shall be that maintained by the Division of Environmental 
Management. The Division of Environmental Management 
shall only run the model after the permit application has 
been submitted. The permit application shall be incomplete 
until the modeling analysis is completed. TTie owner or 
operator of the source shall apply such degree of control and 
obtain such offsets necessary to demonstrate the new source 
or modified source will not cause or contribute to a viola- 
tion. 

Statutory Authority G.S. 143-215. 3(a)(1); 



1523 



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November 1, 1995 



10:15 



PROPOSED RULES 



143-215. 107(a)(5); 143-215. 108(b). 

SECTION .0800 - COMPLEX SOURCES 

.0804 AIRPORT FAdLITIES 

(a) This Rule does not apply to military airfields. 

(b) Before constructing or modifying any airport facility 
designed to haye at least 100,000 annual aircraft operations, 
or at least 45 peak-hour aircraft operations (one operation 
equals one takeoff or one landing), the owner or developer 
of the airport facility shall apply for and haye received a 
permit as described in 15A NCAC 2Q .0600, and shall 
comply with all terms and conditions therein. 

Statutory Authority G.S. 143-2 15. 3 (a)(1); 143-215.109. 

.0805 PARKING FACILITIES 

(a) The owner or developer of a transportation facility 
shall not construct or modify a parking area or associated 
buildings until he has applied for and received a permit 
under 15A NCAC 2Q .0600 where the parking area is for: 

(1) construction of a new or expansion of an exist- 
ing parking lot or combination of parking lots 
resulting in a parking capacity of at least 1500 
spaces or a potential open parking area of at 
least 450,000 square feet (1500 spaces at 300 
square feet per stall); 

(2) modification of an existing jjarking lot or combi- 
nation of parking lots with a parking capacity of 
at least 1500 spaces that will be expanded by at 
least 500 spaces beyond the last permitted num- 
ber of spaces; 

(3) construction of a new or expansion of an exist- 
ing parking deck or garage resulting in a parking 
capacity of at least 750 spaces or a (potential 
parking area of at least 225,000 square feet (750 
spaces at 300 square feet per stall); 

(4) modification of an existing parking deck or 
garage with a parking capacity of at least 750 
spaces that will be expanded by at least 250 
spaces beyond the last permitted number of 
spaces; 

(5) construction of a new or expansion of an exist- 
ing combination of parking lots, decks, and 
garages resulting in a parking capacity of at least 
1000 spaces or a potential parking area of at 
least 300,000 square feet; or 

(6) modification of an existing combination of 
parking lots, decks, and garages with a parking 
capacity of at least 1000 spaces that will be 
expanded by at least 500 spaces beyond the last 
permitted number of spaces. 

(b) New or modified parking lots, decks, or garages with 
a parking capacity of 500 or more spaces and existing or 
proposed parking facilities that: 

(1) are directly adjacent to each other and the 
combined parking capacities are greater than 



those defined in Paragraph (a) of this Rule, and 
(2) use the same public roads or traffic network, 
shall be considered one lot or deck. Transportation facilities 
are considered to be directly adjacent if they are within 100 
meters of each other in a suburban or rural area or 50 
meters of each other in an urban area and if there are no 
existing physical barriers, such as. buildings or terrain- 
Parking lota, docks, or gomgoa that ore connoctod such that 
a person may drive from one to another without having to 
trav e l on a public otr ee t or road ohall be oonoid e r e d one lot 
or d e ok. — Parking loto, deoko, or gomgos of oomm eg 
ownorship soparatod by a public atroot or road but within 
150 foot of one anothoF and with no existing pbyoioal barrier 
( e .g. buUdingD, terrain, etc.) will bo consid e red one facility 
for p e rmit and modeling purpoo e a. 

(c) Temporary barriers shall not be used to reduce the 
capacity of an otherwise affected transportation facility to 
less than the amount which requires permitting. The design 
and plan shall clearly show the total parking capacity. 

(d) Phased construction shall be evaluated and permitted 
for a period not to exceed five years from the date of 
application. 

Statutory Authority G.S. 143-215. 3(a)(1); 143-215.109. 

SECTION .0900 - VOLATILE ORGANIC 
COMPOUNDS 



.0901 DEFINITIONS 

For the purpose of this Section, the following definitions 
apply: 

(1) "Coating" means a functional, protective, or 
decorative film applied in a thin layer to a surface. 

(2) "Coating applicator" means an apparatus used to 
apply a surface coating. 

(3) "Coating line" means one or more apparatus or 
operations in a single line wherein a surface 
coating is applied, dried, or cured and which 
include a coating applicator and flashoff area and 
may include an oven or associated control devices. 

(4) "Continuous vapor control system" means a vapor 
control system which treats vapors displaced from 
tanks during filling on a demand basis without 
intermediate accumulation. 

(5) "Delivered to the applicator" means the condition 
of coating after dilution by the user just before 
application to the substrate. 

(6) "Flashoff area" means the space between the 
application area and the oven. 

(7) "High solids coating" means a coating which 
contains a higher jsercentage of solids and a lower 
percentage of volatile organic compounds and 
water thereby potentially lowering volatile organic 
comjxjund emissions; usually paints with greater 
than 60 percent solids by volume are considered 
high solids coatings although the term is often 
applied to any coating that meets the Environmen- 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1524 



PROPOSED RULES 



tal Protection Agency Control Technology Guide- 
lines. 

(8) "Hydrocarbon" means any organic compound of 
carbon and hydrogen only. 

(9) "Incinerator" means a combustion apparatus 
designed for high temperature operation in which 
solid, semisolid, liquid, or gaseous combustible 
wastes are ignited and burned efficiently and from 
which the soUd and gaseous residues contain little 
or no combustible material. 

(10) "Intermittent vapor control system" means a vapor 
control system which employs an intermediate 
vapor holder to accumulate vapors displaced from 
tanks during filling. The control device treats the 
accumulated vapors only during automatically 
controlled cycles. 

(1 1) "Loading rack" means an aggregation or combina- 
tion of loading equipment arranged so that all 
loading outlets in the combination can be con- 
nected to a tank truck or trailer parked in a speci- 
fied loading space. 

(12) "Low solvent coating" means a coating which 
contains a substantially lower amount of volatile 
organic compound than conventional organic 
solvent borne coatings; it usually falls into one of 
three major groups of high solids, waterbome, or 
powder coatings. 

(13) "Organic material" means a chemical compound 
of carbon excluding carbon monoxide, carbon 
dioxide, carbonic acid, metallic carbides or car- 
bonates, and ammonium carbonate. 

(14) "Oven" means a chamber within which heat is 
used to bake, cure, polymerize, or dry a surface 
coating. 

(15) "Potential emissions" means the quantity of a 
fxjilutant which would be emitted at the maximum 
capacity of a stationary source to emit the pollut- 
ant under its physical and operational design. Any 
physical or operational limitation on the capacity 
of the source to emit a pollutant, including air 
pollution control equipment and restrictions on 
hours of operation or on the type or amount of 
material combusted, stored, or processed, shall be 
treated as part of its design if the limitation or the 
effect it would have on emissions is described or 
contained as a condition in the federally enforce- 
able permit. Secondary emissions do not count in 
determining potential emissions of a stationary 
source. Fugitive emissions count, to the extent 
quantifiable, in determining the jxjtential emissions 
only in these cases: 

(a) petroleum refineries; 
fb) chemical process plants; and 
(c) fjetroleum storage and transfer units with a total 

storage capacity exceeding 300,000 barrels. 

(16) "Prime coat" means the first film of coating 
applied to a surface to protect it or to prepare it to 



receive subsequent coatings. 

(17) "Reasonably available control technology" (also 
denoted as RACT) means the lowest emission 
limit which a particular source is capable of 
meeting by the application of control technology 
that is reasonably available considering technologi- 
cal and economic feasibility. It may require 
technology which has been applied to similar, but 
not necessarily identical, source categories. 

(18) "Reid vapor pressure" means the absolute vapor 
pressure of volatile crude oil and volatile 
nonviscous petroleum liquids except liquefied 
petroleum gases as determined by American 
Society for Testing and Materials, Part 17, 1973, 
D-323-72 (reapproved 1977). 

(19) "Shutdown" means the cessation of operation of a 
source or a part thereof or emission control 
equipment. 

(20) "Solvent" means organic materials which are 
hquid at standard conditions and which are used as 
dissolvers, viscosity reducers, or cleaning agents. 

(21) "Standard conditions" means a temperature of 
68°F and pressure of 29.92 inches of mercury. 

(22) "Startup" means the setting in op>eration of a 
source or emission control equipment. 

(23) "Substrate" means the surface to which a coating 
is applied. 

(24) "Topcoat" means the final films of coating applied 
in a multiple or single coat op>eration. 

(25) "True vapor pressure" means the equilibrium 
partial pressure exerted by a petroleum liquid as 
determined in accordance with methods described 
in American Petroleum Institute Bulletin 2517, 
"Evaporation Loss from Floating Roof Tanks," 
1962. 

(26) "Vap)or collection system" means a vapor transjxsrt 
system which uses direct displacement by the 
liquid loaded to force vapors from the tank into a 
vajjor control system. 

(27) "Vapor control system" means a system which 
prevents release to the atmosphere of at least 90 
percent by weight of organic compounds in the 
vapors displaced from a tank during the transfer of 
gasoline. 

(28) "Volatile organic compound" (also denoted as 
VOC) means any compound of carbon whose 
volatile content can be determined by the proce- 
dure described in Rules .0913 or .0939 of this 
Section excluding: excluding any compound that is 
listed under 40 C¥R 51.100(s) as having been 
determined to have negligible photochemical 
reactivity. 

carbon monoxide. 






oarbon dioxid e , 

oarbonio aoid, 

metallic carbides or carbonatoa, 

ammonium carbonate. 



1525 



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November 1, 1995 



10:15 



PROPOSED RULES 






mothano, 



ethan e . 



(b) triohlorofluoromethono (ohlorofluorooarbon 11), 

(chlorofluorocarbon 



(*>■ 



©- 



dichlorodi fluoromothano 
ohiorodifluorom e than e (ohlorofluorooarbon 23), 



(k) trifluoromothon e (fluorooarbon 23), 

(1) trichlorotrifluoroothano (chlorofluorocarbon 



(«)- 



diohlorototrafluoro e thon e 



(ohlorofluorooarbon 



-H4)t 



(a) ohloropontafluoroothano (ohlorofluorooarbon 

1,1,1 triohloroothon e (m e thyl ohloroform). 






diohloromothan e (mothylon e ohlorid e ), 



{e^ dichlorotrifluoroothano (hydrochlorofluorocarbon 



433>T 



(f) totrafluoroothan e (hydrofluorooarbon 13ia), 

(e) d i ohlorofluoro e thano (hydroohlorofluorooarbon 

1 4 1b), 
(4) chlorodifluoroothono (hydrochlorofluorocarbon 

l'12b), 
ftt) 2 ohloro — 1,1,1,2 totrafluoro e than e 

(hydrochlorofluorocarbon 12 4 ), 

(v) pontafluoroothono (hydrofluorooarbon 125), 

(w) 1,1,2,2 totrafluoro e than e (hydrofluorooarbon 

\2\) 

(?t) 1,1,1 trifluoroothano (hydrofluorooarbon 1 4 3a), 

(y) 1,1 di fluorooarbon (hydrofluorooarbon — 152a), 

(*) porfluorooarbon oompoundo that fall into th e s e 

olasooo: 
(i) — cyclic, branched, or linear oomplotoly fluori 

nated alkan e o; 
(ii) — oyolio, branch e d, or lin e ar oomplet e ly fluori 

nated ethers with no unaaturationa; 
(iii) — cyclic, branchod, or linear oomplotoly fluori 
nat e d t e rt i ar>f amin e o with no uneaturationo; 

(iv) — s ulfur containing porfluorocarbons with no 
unsaturation s and with s ulfur bonda only to 
oarbon and fluorin e . 

Statutory Authority G.S. 143-215. 3(a)(1). 

.0917 AUTOMOBILE AND LIGHT-DUTY 
TRUCK MANUFACTURING 

(a) For the purpose of this Regulation Rule, the following 
definitions apply: 

(1) "Application area" means the area where the 
coating is applied by dipping or spraying. 

(2) "Manufacturing plant" means a facility where 
auto body parts are manufactured and/or or 
finished for eventual inclusion into a finished 
product ready for sale to vehicle dealers. 
Customizers, body shops and other repainters 
are not part of this definition. 



(3) "Automobile" means all passenger cars or 
p>assenger car derivatives capable of seating 12 
or fewer passengers. 

(4) "Light-duty trucks" means any motor vehicles 
rated at 8,500 pounds gross weight or less which 
are designed primarily for purpose of transporta- 
tion or are derivatives of such vehicles except 
automobiles. 

(b) This Regulation Rule applies to the application 
area(s), flashoff area(s), and oven(s), of automotive and 
light-duty truck manufacturing plants involved in prime, 
topcoat and final repair coating operations. 

(c) With the exception stated in Paragraph (d) of this 
Rule, emissions of volatile organic compounds from any 
automotive or light-duty truck manufacturing plant coating 
line subject to this Regulation Rule shall not exceed: 

(1) 1.4 pounds of volatile organic compounds per 
gallon of solids delivered to the applicator from 
prime application, flashoff area, and oven opera- 
tions; 

(2) 4.5 pounds of volatile organic compounds per 
gallon of solids delivered to the applicator from 
topcoat and surface application, flashoff area, 
and oven operation; 

(3) 13.8 pounds of volatile organic compounds per 
gallon of solids delivered to the applicator from 
final repair application, flashoff area, and oven 
operation. 

(d) Any source which has chosen to control emissions of 
volatile organic compounds under Rule .0518(e) of this 
Subchapter and which has installed air pollution control 
equipment in accordance with an air quality permit in order 
to comply with this Rule before December 1, 1989, may 
comply with the limits contained in this Paragraph instead 
of those contained in Paragraph (c) of this Rule. Emissions 
of volatile organic compounds from any automotive or light- 
duty truck manufacturing plant coating line subject to this 
R e gulation Rule shall not exceed: 

(1) 1.2 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, delivered to the applicator from 
prime application, flashoff area, and oven opera- 
tions; 

(2) 2.8 pounds of volatile organic compounds per 
gallon of coating, daily weighted average, 
excluding water and exempt compounds, deliv- 
ered to the applicator from topcoat and surface 
application, flashoff area, and oven operation; 

(3) 4.8 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, delivered to the applicator from 
final repair application, flashoff area, and oven 
operation. 



Statutory Authority G. S. 
143-215. 107(a)(5). 



143-215. 3(a)(1): 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1526 



PROPOSED RULES 



.0918 CAN COATING 

(a) For the purpose of this Rogu l ation Rule , the following 
definitions apply: 

(1) "End sealing compound" means a synthetic 
rubber compound which is coated onto can ends 
and which functions as a gasket when the end is 
assembled on the can. 

(2) "Exterior base coating" means a coating applied 
to the exterior of a can to provide exterior 
protection to the metal and to provide back- 
ground for the lithographic or printing operation. 

(3) "Interior base coating" means a coating applied 
by roller coater or spray to the interior of a can 
to provide a protective lining between the can 
metal and product. 

(4) "Interior body spray" means a coating sprayed 
on the interior of the can body to provide a 
protective film between the product and the can. 

(5) "Overvamish" means a coating applied directly 
over ink to reduce the coefficient of friction, to 
provide gloss, and to protect the finish against 
abrasion and corrosion. 

(6) "Three-piece can side-seam spray" means a 
coating sprayed on the exterior and interior of a 
welded, cemented, or soldered seam to protect 
the exposed metal. 

(7) "Two-piece can exterior end coating" means a 
coating applied by roller coating or spraying to 
the exterior end of a can to provide protection to 
the metal. 

(b) This Regulation Rule applies to coating applicator(s) 
and oven(s) of sheet, can, or end coating lines involved in 
sheet basecoat (exterior and interior) and overvamish; two- 
piece can interior body spray; two-piece can exterior end 
(spray or roll coat); three-piece can side-seam spray and end 
sealing compound operations. 

(c) With the exception stated in Paragraph (d) of this 
Rule, emissions of volatile organic compounds from any can 
coating line subject to this R e gu l ation Rule shall not exceed: 

(1) 4.5 pounds of volatile organic compounds per 
gallon of solids delivered to the coating applica- 
tor from sheet basecoat (exterior and interior) 
and overvamish or two-piece can exterior 
(basecoat and overvamish) operations; 

(2) 9.8 pounds of volatile organic compounds per 
gallon of solids delivered to the coating applica- 
tor from two and three-piece can interior body 
spray and two-piece can exterior end (spray or 
roll coat) operations; 

(3) 21.8 pounds of volatile organic compounds per 
gallon of solids delivered to the coating applica- 
tor from a three-piece applicator from a three- 
piece can side-seam spray operations; 

(4) 7.4 pounds of volatile organic compounds per 
gallon of solids delivered to the coating applica- 
tor from end sealing compound operations. 

(d) Any source which has chosen to control emissions of 



volatile organic compounds under Rule .0518(e) of this 
Subchapter and which has installed air pollution control 
equipment in accordance with an air quality permit in order 
to comply with this Rule before December 1, 1989, may 
comply with the limits contained in this Paragraph instead 
of those contained in Paragraph (c) of this Rule. Emissions 
of volatile organic compounds from any can coating line 
subject to this Regulation Rule shall not exceed: 

(1) 2.8 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, delivered to the coating applicator 
from sheet basecoat (exterior and interior) and 
overvamish or two-piece can exterior (basecoat 
and overvamish) operations; 

(2) 4.2 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, delivered to the coating applicator 
from two and three-piece can interior body spray 
and two-piece can exterior end (spray or roll 
coat) operations; 

(3) 5.5 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, delivered to the coating applicator 
from a three-piece applicator from a three-piece 
can side-seam spray operations; 

(4) 3.7 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, delivered to the coating applicator 
from end sealing compound operations. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

.0919 COIL COATING 

(a) For the purpose of this R e gulation Rule , the following 
definitions apply: 

(1) "Coil coating" means the coating of any flat 
metal sheet or strip that comes in rolls or coils. 

(2) "Quench area" means a chamber where the hot 
metal exiting the oven is cooled by either a 
spray of water or a blast of air followed by 
water cooling. 

(b) This R e gulation Rule applies to the coating applica- 
tor(s), oven(s), and quench area(s) of coil coating lines 
involved in prime and top coat or single coat operations. 

(c) With the exception stated in Paragraph (d) of this 
Rule, emissions of volatile organic compounds from any coil 
coating line subject to this Rogulation Rule shall not exceed 
4.0 pounds of volatile organic compounds per gallon of 
solids delivered to the coating application applicator from 
prime and topcoat or single coat operations. 

(d) Any source which has chosen to control emissions of 
volatile organic compounds under Rule .0518(e) of this 
Subchapter and which has installed air pollution control 
equipment in accordance with an air quality permit in order 
to comply with this Rule before December 1, 1989, may 
comply with the limits contained in this Paragraph instead 



1527 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



of those contained in Paragraph (c) of this Rule. Emissions 
of volatile organic compounds from any coil coating line 
subject to this Regulation Rule shall not exceed 2.6 pounds 
of volatile organic compounds per gallon of coating, 
excluding water and exempt compounds, delivered to the 
coating applicator from prime and topcoat or single coat 
operations. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

.0920 PAPER COATING 

(a) For the purpose of this Regulation Rule , the following 
definitions apply: 

(1) "Knife coating" means the application of a 
coating material to a substrate by means of 
drawing the substrate beneath a knife that 
spreads the coating evenly over the full width of 
the substrate. 

(2) "Paper coating" means decorative, protective, or 
functional coatings put on paper and pressure 
sensitive tapes regardless of substrate; the coat- 
ings are distributed uniformly across the web. 
Related web coating processes on plastic film 
and decorative coatings on metal foil are in- 
cluded in this definition. Saturation operations 
are included in this defmition. 

(3) "Roll coating" means the application of a coating 
material to a substrate by means of hard rubber 
or steel rolls. 

(4) "Rotogravure coating" means the application of 
a coating material to a substrate by means of a 
roll coating technique in which the substance to 
be applied is temporarily retained in etchings on 
the coating roll. The coating material is picked 
up in these recessed areas and is transferred to 
the substrate. 

(b) This Regulation Rule applies to roll, knife or rotogra- 
vure coater(s) and drying oven(s) of paper coating lines. 

(c) This Regulation doos not apply to: 
(4) the graphic arts or printing, or 

(3) proo e ss e s in which th e ooating is not distribut e d 

uniformly aoroso th e w e b, or 
^ procoosos whoro both coating and printing are 

porformod on tho same machine. 

(d) £c) With the exception stated in Paragraph (e) {d} of 
this Rule, emissions of volatile organic compounds from any 
paper coating line subject to this Regulation Rule shall not 
exceed 4.8 pounds of volatile organic compounds per gallon 
of solids delivered to the coating applicator from a paper 
coating line. 

(^ £d) Any source which has chosen to control emissions 
of volatile organic compounds under Rule .0518 (e) of this 
Subchapter and which has installed air pollution control 
equipment in accordance with an air quality permit in order 
to comply with this Rule before December 1, 1989, may 
comply with the limits contained in this Paragraph instead 



of those contained in Paragraph £ci(d) of this Rule. Emis- 
sions of volatile organic compounds from any pa[)er coating 
line subject to this R e gulation Rule shall not exceed 2.9 
p>ounds of volatile organic compounds per gallon of coating, 
excluding water and exempt compounds, delivered to the 
coating applicator from a paper coating line. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

.0921 FABRIC AND VINYL COATING 

(a) For the purpose of this Regulation Rule , the following 
definitions apply: 

(1) "Fabric coating" means applying protective or 
functional coatings to a textile substance with a 
knife, roll, rotogravure, rotary screen, or flat 
screen coater to impart properties that are not 
initially present, such as strength, stability, 
water or acid repellency, or appearance. Print- 
ing on textile fabric for decorative or other 
purposes is not part of this defmition. Satura- 
tion operations are included in this definition. 

(2) "Knife coating" means the application of a 
coating material to a substrate by means of 
drawing the substrate beneath a knife which 
spreads the coating evenly over the full width of 
the substrate. 

(3) "Roll coating" means the application of a coating 
material to a substrate by means of hard rubber 
or steel rolls. 

(4) "Rotogravure coating" means the application of 
a coating material to a substrate by means of a 
roll coating technique in which the pattern to be 
applied is etched on the coating roll. The 
coating material is picked up in these recessed 
areas and is transferred to the substrate. 

(5) "Vinyl coating" means applymg a functional, 
decorative, or protective tof>coat, or printing on 
vinyl coated fabric or vinyl sheets. 

(6) "Rotary screen or flat screen coating" means the 
application of a coating material to a substrate 
by means of masking the surface and applying a 
color or finish using a screen either in flat form 
or rotary form. 

(b) This Regulation Rule applies to roll, knife, rotogra- 
vure, rotary screen, or flat screen coater(s) and drying 
oven(s) of fabric and vinyl coating lines. 

(c) With the exception stated in Paragraph (d) of this 
Rule, emissions of volatile organic compounds from any 
fabric coating line or vinyl coating line subject to this 
R e gulation Rule shall not exceed: 

(1) 4.8 pounds of volatile organic compounds per 
gallon of solids delivered to the coating applica- 
tor from a fabric coating line; 

(2) 7.9 pounds of volatile organic compounds per 
gallon of solids delivered to the coating applica- 
tor from a vinyl coating line. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1528 



PROPOSED RULES 



(d) Any source which has chosen to control emissions of 
volatile organic compounds under Rule .0518(e) of this 
Subchapter and which has installed air pjollution control 
equipment in accordance with an air quality permit in order 
to comply with this Rule before December 1, 1989, may 
comply with the limits contained in this Paragraph instead 
of those contained in Paragraph (c) of this Rule. Emissions 
of volatile organic compounds from any fabric coating line 
or vinyl coating line subject to this Regulation Rule shall not 
exceed: 

(1) 2.9 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, delivered to the coating applicator 
from a fabric coating line; 

(2) 3.8 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, delivered to the coating applicator 
from a vinyl coating line. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

Mil METAL FURNITURE COATING 

(a) For the purpose of this Regulation Rule, the following 
defmitions apply: 

(1) "Application area" means the area where the 
coating is applied by spraying, dipping, or 
flowcoating techniques. 

(2) "Metal furniture coating" means the surface 
coating of any furniture made of metal or any 
metal part which will be assembled with other 
metal, wood, fabric, plastic, or glass parts to 
form a furniture piece. 

(b) This R e gulation Rule applies to the application 
area(s), flashoff area(s), and oven(s) of metal furniture 
coating lines involved in prime and topcoat or single coating 
operations. 

(c) With the exception stated in Paragraph (d) of this 
Rule, emissions of volatile organic compounds from any 
metal furniture coating line subject to this Regulation Rule 
shall not exceed 5. 1 pounds of \'olatile organic compounds 
per gallon of solids delivered to the coating applicator from 
prime and topcoat or single coat operations. 

(d) Any source which has chosen to control emissions of 
volatile organic compounds under Rule .0518(e) of this 
Subchapter and which has installed air pollution control 
equipment in accordance with an air quality permit in order 
to comply with this Rule before December 1, 1989, may 
comply with the limits contained in this Paragraph instead 
of those contained in Paragraph (c) of this Rule. Emissions 
of volatile organic compounds from any metal furniture 
coating line subject to this Regulation Rule shall not exceed 
3.0 pounds of volatile organic compounds per gallon of 
coating, excluding water and exempt compounds, delivered 
to the coating applicator from prime and topcoat or single 
coat operations. 



Statutory Authority G.S. 143-215. 3(a)(1); 

143-215. 107(a)(5). 



.0923 



SURFACE COATING OF LARGE 
APPLIANCES 

(a) For the purpose of this R e gulation Rule , the following 
defmitions apply: 

(1) "Application area" means the area where the 
coating is applied by spraying, dipping, or 
flowcoating techniques. 

(2) "Single coat" means a single film of coating 
applied directly to the metal substrate omitting 
the primer application. 

(3) "Large appliances" means doors, cases, lids, 
panels, and interior support parts of residential 
and commercial washers, dryers, ranges, refrig- 
erators, freezers, water heaters, dishwashers, 
trash compactors, air conditioners, and other 
similar products. 

(b) This Regulation Rule applies to application area(s), 
flashoff area(s), and oven(s) of large appliance coating lines 
involved in prime, single, or topcoat coating operations. 

(e) — Thio R e gulation do e s not apply to th e uo e of quiok 
drying lacquers for repair of scratchca and nicks which 
occur during assembly, if the volume of coating doos not 
oxoood on e quart in any eight hour p e riod. 

(4) {£} With the exception stated in Paragraph (e) £d} of 
this Rule, emissions of volatile organic compounds from any 
large appliance coating line subject to this Regulation Rule 
shall not exceed 4.5 pounds of volatile organic compounds 
per gallon of solids delivered to the coating applicator from 
prime, single, or topcoat coating operations. 

(e) (d) Any source which has chosen to control emissions 
of volatile organic compounds under Rule .0518 (e) of this 
Subchapter and which has installed air pollution control 
equipment in accordance with an air quality permit in order 
to comply with this Rule before December 1, 1989, may 
comply with the limits contained in this Paragraph instead 
of those contained in Paragraph fd) £c} of this Rule. 
Emissions of volatile organic compounds from any large 
appliance coating line subject to this R e gulation Rule shall 
not exceed 2.8 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt compounds, 
delivered to the coating applicator from prime, single, or 
topcoat coating operations. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

.0924 MAGNTT WIRE COATING 

(a) For the purpxjse of this R e gulation Rule , "magnet wire 
coating" means the process of applying a coating of electri- 
cally insulating varnish or enamel to aluminum or copper 
wire for use in electrical machinery. 

(b) This R e gulation Rule appUes to the oven(s) of magnet 
wire coating of>erations. 

(c) With the exception stated in Paragraph (d) of this 



1529 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



Rule, emissions of volatile organic compounds from any 
magnet wire coating oven subject to this Regulation Rule 
shall not exceed 2.2 pounds of volatile organic compounds 
per gallon of soUds delivered to the coating applicator from 
magnet wire coating operations. 

(d) Any source which has chosen to control emissions of 
volatile organic compounds under Rule .0518(e) of this 
Subchapter and which has installed air pollution control 
equipment in accordance with an air quality permit in order 
to comply with this Rule before December 1, 1989, may 
comply with the limits contained in this Paragraph instead 
of those contained in Paragraph (c) of this Rule. Emissions 
of volatile organic compounds from any magnet wire 
coating oven subject to this R e gulation Rule shall not exceed 
1.7 pounds of volatile organic compounds per gallon of 
coating, excluding water and exempt comjX)unds, delivered 
to the coating applicator from magnet wire coating opera- 
tions. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

.0926 BULK GASOLINE PLANTS 

(a) For the purfxjse of this Rule, the following defmitions 
apply: 

(1) "Average daily throughput" means annual 
throughput of gasoline divided by 312 days per 
year. 

(2) "Bottom filling" means the filling of a tank truck 
or stationary storage tank through an opening 
that is flush with the tank bottom. 

(3) "Bulk gasoline plant" means a gasoline storage 
and distribution facility which has an average 
daily throughput of less than 20,000 gallons of 
gasoline and which usually receives gasoline 
from bulk terminals by trailer transport, stores 
it in tanks, and subsequently dispenses it via 
account trucks to local farms, businesses, and 
service stations. 

(4) "Bulk gasoline terminal" means a gasoline 
storage facility which usually receives gasoline 
from refineries primarily by pipeline, ship, or 
barge; and delivers gasoline to bulk gasoline 
plants or to commercial or retail accounts pri- 
marily by tank truck; and has an average daily 
throughput of more than 20,000 gallons of 
gasoline. 

(5) "Gasoline" means any petroleum distillate having 
a Reid vapor pressure of four psia or greater. 

(6) "Incoming vapor balance system" means a 
combination of pip>es or hoses which create a 
closed system between the vapor spaces of an 
unloading tank truck or trailer and a receiving 
stationary storage tank such that vapors dis- 
placed fix)m the receiving stationary storage tank 
are transferred to the tank truck or trailer being 
unloaded. 



(7) "Outgoing vapor balance system" means a 
combination of pipes or hoses which create a 
closed system between the vapor spaces of an 
unloading stationary storage tank and a receiving 
tank truck or trailer such that vapors displaced 
from the receiving tank truck or trailer are 
transferred to the stationary storage tank being 
unloaded. 

(8) "Splash filling" means the filling of a tank truck 
or stationary storage tank through a pipe or hose 
whose discharge opening is above the surface 
level of the liquid in the tank being filled. 

(9) "Submerged filling" means the filling of a tank 
truck or stationary tank through a pipe or hose 
whose discharge opening is entirely submerged 
when the pipe normally used to withdraw liquid 
from the tank can no longer withdraw any 
liquid, or whose discharge opening is entirely 
submerged when the liquid level is six inches 
above the bottom of the tank. 

(b) This Rule applies to the unloading, loading, and 
storage facilities of all bulk gasoline plants and of all tank 
trucks or trailers delivering or receiving gasoline at bulk 
gasoline plants except stationary storage tanks with capaci- 
ties less than 528 gallons. 

(c) The owner or operator of a bulk gasoline plant shall 
not transfer gasoline to any stationary storage tanks after 
May 1, 1993, unless the unloading tank truck or trailer and 
the receiving stationary storage tank are equipped with an 
incoming vapor balance system as described in Paragraph 
(g) £1} of this Rule and the receiving stationary storage tank 
is equipped with a fill line whose discharge opening is flush 
with the bottom of the tank. 

(d) TTie owner or ofjerator of a bulk gasoline plant with 
an average daily gasoline throughput of 4,000 gallons or 
more shall not load tank trucks or trailers at such plant after 
May 1, 1993, unless the unloading stationary storage tank 
and the receiving tank truck or trailer are equipped with an 
outgoing vapor balance system as described in Paragraph (i) 
of this Rule and the receiving tank truck or trailer is 
equipped for bottom filling. 

(e) The owner or operator of a bulk gasoline plant with 
an average daily throughput of more than 2,500 gallons but 
less than 4,000 gallons located in an area with a housing 
density exceeding sjjecified limits as described in this 
Paragraph shall not load any tank truck or trailer at such 
bulk gasoline plant after November 1, 1996, unless the 
unloading stationary storage tank and receiving tank truck or 
trailer are equipped with an outgoing vapor balance system 
as described in Paragraph (i) of this Rule and the receiving 
tank truck or trailer is equipp>ed for bottom filling. In the 
counties of Alamance, Buncombe, Cabarrus, Catawba, 
Cumberland, Davidson, Durham, Forsyth, Gaston, 
Guilford, Mecklenburg, New Hanover, Orange, Rowan, and 
Wake, the specified limit on housing density is 50 resi- 
dences in a square one mile on a side with the square 
centered on the loading rack at the bulk gasoline plant and 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1530 



PROPOSED RULES 



with one side oriented Ln a true North-South direction. In 
all other counties the specified limit on housing density is 
100 residences per square mile. The housing density shall 
be determined by counting the number of residences using 
aerial photographs or other suitable methods acceptable to 
the Director. 

(f) The owner or operator of a bulk gasoline plant not 
subject to the outgoing vapor balance system requirements 
of Paragraph (d) or (e) of this Rule shall not load trucks or 
trailers at such plants unless: 

(1) Equipment is available at the bulk gasoline plant 
to provide for submerge filling of each tank 
truck or trailer; or 

(2) Each receiving tank truck or trailer is equipped 
for bottom filling. 

(g) For a gasoline bulk plants located in nonattainment 
area for ozone, once the average daily throughput of 
gasoline at the bulk gasoline plant reaches or exceeds the 
applicability threshold in Paragraph (d) or (e) of this Rule 
or if Paragraph (d) or (e) is currently applicable to the bulk 
gasoline plant, the bulk gasoline plant shall continue to 
comply with the outgoing vapor balance system require- 
ments of Paragraph (d) or (e) of this Rule, as is applicable, 
even though the average daily gasoline throughput falls 
below the threshold contained in Paragraph (d) or (e) of this 
Rule. 

(h) The owner or operator of a bulk gasoline plant, tank 
truck or trailer that is required to be equipped with a vapor 
balance system pursuant to Paragraphs (c), (d), or (e) of this 
Rule shall not transfer gasoline between tank truck or trailer 
and stationary storage tank unless: 

(1) The vapor balance system is in good working 
order and is connected and operating; 

(2) Tank truck or trailer hatches are closed at all 
times during loading and unloading operations; 
and 

(3) The tank truck's or trailer's pressure/vacuum 
relief valves and hatch covers and the truck 
tanks or storage tanks or associated vapor and 
liquid lines are vapor tight during loading or 
unloading. 

(i) Vapor balance systems required under Paragraphs (c), 
(d), and (e) of this Rule shall consist of the following major 
components: 

(1) a vapor space connection on the stationary 
storage tank equipped with fittings which are 
vapor tight and will be automatically and imme- 
diately closed upon disconnection so as to pre- 
vent release of organic material; 

(2) a connecting pipe or hose equipped with fittings 
which are vapor tight and will be automatically 
and immediately closed upon disconnection so as 
to prevent release of organic material; and 

(3) a vapor space connection on the tank truck or 
trailer equipped with fittings which are vapor 
tight and will be automatically and immediately 
closed upon disconnection so as to prevent 



release of organic material. 

(j) The owner or operator of a bulk gasoline plant shall 
paint all tanks used for gasoline storage white or silver at 
the next scheduled painting or before November 1, 2002, 
whichever is sooner. 

(k) The pressure relief valves on tank trucks or trailers 
loading or unloading at bulk gasoline plants shall be set to 
release at the highest possible pressure (in accordance with 
state or local fire codes or the National Fire Prevention 
Association guidelines). The pressure relief valves on 
stationary storage tanks shall be set at 0.5 psi for storage 
tanks placed in service on or after November 1, 1992, and 
0.25 psi for storage tanks existing before November 1, 
1992. 

(1) No owner or operator of a bulk gasoline plant may 
permit gasoline to be spilled, discarded in sewers, stored in 
opwn containers, or handled in any other inanner that would 
result in evaporation. 

(m) The owner or operator of a bulk gasoline plant shall 
observe loading and unloading operations and shall discon- 
tinue the transfer of gasoline: 

(1) if any liquid leaks are observed, or 

(2) if any vapor leaks are observed where a vapor 
balance system is required under Paragraphs (c), 
(d), or (e) of this Rule. 

(n) The owner or operator of a bulk gasoline plant shall 
not load, or allow to be loaded, gasoline into anv truck tank 
or trailer unless the truck tank or trailer has been certified 
leak tight in accordance with Rule .0933 of this Section 
within the last 12 months. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

.0927 BULK GASOLINE TERMINALS 

(a) For the purpose of this Rule, the following defmitions 
apply: 

(1) "Bulk gasoline terminal" means: 

(A) breakout tanks of an interstate oil pipeline 
facility; or 

(B) a gasoline storage facility which usually re- 
ceives gasoline from refmeries primarily by 
pipeline, ship, or barge; and delivers gasoline 
to bulk gasoline plants or to commercial or 
retail accounts primarily by tank truck; and has 
an average daily throughput of more than 
20,000 gallons of gasoline. 

(2) "Gasoline" means a petroleum distillate having 
a Reid vapor pressure of four psia or greater. 

(3) "Breakout tank" means a tank used to: 

(A) relieve surges in a hazardous liquid pipeline 
system, or 

(B) receive and store hazardous hquids transported 
by pipeline for reinjection and continued 
transport by pipeline. 

(b) Tliis Rule applies to bulk gasoline terminals and the 
appurtenant equipment necessary to load the tank truck or 



1531 



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November 1, 1995 



10:15 



PROPOSED RULES 



trailer compartments. 

(c) Gasoline shall not be loaded into any tank trucks or 
trailers from any bulk gasoline terminal unless: 

(1) The bulk gasoline terminal is equippted with a 
vajxsr control system that prevents the emissions 
of volatile organic compounds from exceeding: 

(A) 80 milligrams per liter (4.7 grains per gallon) 
of gasoline loaded for control systems installed 
before December 1, 1992 imtil December 1, 
1995 or the next major modification, which- 
ever occurs first; after December 1, 1995 or at 
the next major modification, these control 
systems shall prevent emissions of volatile 
organic compounds from exceeding 35 milli- 
grams per liter of gasoline loaded; 

(B) 35 milligrams per liter for control systems 
installed after December 1, 1992; and that is 
properly installed, in good working order, and 
in operation. The owner or operator shall 
obtain from the manufacturer and maintain in 
his records a pre-installation certification 
stating the vapor control efficiency of the 
system in use; 

(2) Displaced vapors and gases are vented only to 
the vapor control system or to a flare; 

(3) A means is provided to prevent liquid drainage 
from the loading device when it is not in use or 
to accomplish complete drainage before the 
loading device is disconnected; and 

(4) All loading and vapor lines are equipped with 
fittings which make vapor-tight connections and 
which are automatically and immediately closed 
upon disconnection. 

(d) Sources regulated by Paragraph (b) of this Rule shall 
not: 

(1) allow gasoline to be discarded in sewers or 
stored in open containers or handled in any 
manner that would result in evaporation, or 

(2) allow the pressure in the vapor collection system 
to exceed the tank truck or trailer pressure relief 
settings. 

(e) The owner or operator of a bulk gasoline terminal 
shall paint all tanks used for gasoline storage white or silver 
at the next scheduled painting or by December 1, 2002, 
whichever occurs first. 

(f) The owner or operator of a bulk gasoline terminal 
shall install on each external floating roof tank with an 
inside diameter of 100 feet or less used to store gasoline a 
self-supporting roof, such as a geodesic dome, at the next 
time that the tank is taken out of service or by December 1 , 
2002, whichever occurs first. 

(g) The following equipment shall be required on all new 
tanks storing gasoline at a bulk gasoline terminal when put 
into service and shall be required on all existing tanks 
storing gasoline at a bulk gasoline terminal by December 1 , 
1995: 

(1) rim-mounted secondaiy seals on all external and 



internal floating roof tanks, 

(2) welded seams where possible, otherwise gaskets 
on roof and deck fittings, and 

(3) floats in the slotted guide poles with a gasket 
around the cover of the poles. 

(h) If, upon facility or operational modification of a bulk 
gasoline terminal that existed before December 1, 1992, an 
increase in benzene emissions results such that: 

(1) emissions of volatile organic compounds in- 
crease by more than 25 tons cumulative at any 
time during the five years following modifica- 
tions; and 

(2) annual emissions of benzene from the cluster 
where the bulk gasoline terminal is located 
(including the pipeline and marketing terminals 
served by the pipeline) exceed benzene emis- 
sions from that cluster based upon calendar year 
1991 gasoline throughput and application of the 
requirements of this Subchapter, the annual 
increase in benzene emissions due to the modifi- 
cation shall be offset within the cluster by reduc- 
tion in benzene emissions beyond that otherwise 
achieved as a result of compliance with this 
Rule, in the ratio of at least 1.3 to 1. 

(i) The owner or operators of a bulk gasoline terminal 
that has been permitted before December 1, 1992, to emit 
toxic air pollutants under 15A NCAC 2H .0610 to comply 
with Section . 1 1(X) of this Subchapter shall continue to 
adhere to all terms and conditions of the permit issued under 
15 A NCAC 2H .0610 and to bring the terminal into 
comphance with Section . 1 100 of this Subchapter in accor- 
dance with the terms and conditions of the permit, in which 
case the bulk gasoline terminal shall continue to need a 
permit to emit toxic air pollutants and shall be exempted 
from Paragraphs (e) through (h) of this Rule. 

(j) Within one year after December 1, 1996, the Director 
shall determine the incremental ambient benzene levels at 
the fence line of any bulk gasoline terminal cluster resulting 
from benzene emissions from such cluster and shall report 
his findings to the Commission. 

(k) The owner or operator of any bulk gasoline terminal 
subject to this Rule that begins construction or is in opera- 
tion before December 1, 1992, shall submit: 

(1) documentation that the control system meets the 
limit of 35 milligrams pier liter required under 
Paragraph (c) of this Rule and that the require- 
ments of Paragraph (g) of this Rule have been 
met, or 

(2) a compliance schedule by which the bulk gaso- 
line terminal shall come into compliance by 
December 1, 1995, with Paragraphs (c) or (g) of 
this Rule. 

(I) The owner or operator of a bulk gasoline terminal 
shall not load, or allow to be loaded, gasoline into anv truck 
tank or trailer unless the truck tank or trailer has been 
certified leak tight in accordance with Rule .0933 of this 
Section within the last 12 months. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1532 



PROPOSED RULES 



Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

.0928 GASOLINE SERVICE STATIONS STAGE I 

(a) Definitions. For the purpose of this Rule, the 
following definitions apply: 

(1) "Gasoline" means a petroleum distillate having 
a Reid vapor pressure of four psia or greater. 

(2) "Delivery vessel" means tank trucks or trailers 
equipped with a storage tank and used for the 
transport of gasoline from sources or supply to 
stationary storage tanks of gasoline dispensing 
facilities. 

(3) "Submerged fill pipe" means any fill pipe with 
a discharge opening which is entirely submerged 
when the pipe normally used to withdraw liquid 
from the tank can no longer withdraw any 
liquid, or which is entirely submerged when the 
level of the liquid is: 

(A) six inches above the bottom of the tank if the 
tank does not have a vapor recovery adaptor, 
or 

(B) 12 inches above the bottom of the tank if the 
tank has a vapor recovery adaptor. 

If the opening of the submerged fill pipe is cut 
at a slant, the distance is measured from the top 
of the slanted cut to the bottom of the tank. 

(4) "Owner" means any person who has legal or 
equitable title to the gasoline storage tank at a 
facility. 

(5) "Operator" means any person who leases, oper- 
ates, controls, or supervises a facility at which 
gasoline is dispensed. 

(6) "Gasoline dispensing facility" means any site 
where gasoline is dispensed to motor vehicle 
gasoline tanks from stationary storage tanks. 

(7) "Gasoline service station" means any gasoline 
dispensing facility where gasoline is sold to the 
motoring public from stationary storage tanks. 

(8) "Throughput" means the amount of gasoline 
dispensed at a facility during a calendar month 
after November 15, 1990. 

(9) "Line" means any pipe suitable for transferring 
fluids gasoline . 

(10) "Dual point system" means the delivery of the 
product to the stationary storage tank and the 
recovery of vapors from the stationary storage 
tanks tank occurs occur through two separate 
openings in the storage tank and two separate 
hoses between the tank truck and the stationary 
storage tank. 

(11) "Coaxial system" means the delivery of the 
product and recovery of vapors occur through a 
single coaxial fill tube, which is a tube within a 
tube. Product is delivered through the inner 
tube, and vapor is recovered through the annular 
space between the walls of the inner tube and 



outer tube. 

(12) "Poppeted vapor recovery adaptor" means a 
vapor recovery adaptor that automatically and 
immediately closes itself when the vapor return 
line is disconnected and maintains a tight seal 
when the vapor return line is not connected. 

(13) "Stationary storage tank" means a gasoline 
storage container which is a permanent fixture. 

(b) Applicability. This Rule applies to all gasoline 
dispensing facilities and gasoline service stations and to 
delivery vessels deUvering gasoline to a gasoline dispensing 
facility or gasoline service station. 

(c) Exemptions. This Rule does not apply to: 

(1) transfers made to storage tanks ef at gasoline 
dispensing facilities or gasoline service stations 
equipjDed with floating roofs or their equivalent; 

(2) stationary tanks with a capacity of not more than 
2,000 gallons which are in place before July 1, 
1979, if the tanks are equipped with a permanent 
or portable submerged fill pipe; 

(3) stationary storage tanks with a capacity of not 
more than 550 gallons which are installed after 
June 30, 1979, if tanks are equipped with a 
p>ermanent or portable (portable) submerged fill 
pipe; 

(4) stationary storage tanks with a capacity of not 
more than 2000 gallons located on a farm or a 
residence and used to store gasoline for farm 
equipment or residential use if gasoline is deliv- 
ered to the tank through a permanent or portable 
(portabl e ) submerged fill pipe except that this 
exemption does not apply in ozone non-attain- 
ment areas; 

(5) stationary storage tanks at a gasoline dispensing 
facility or gasoline service stationo station where 
the combined armual throughput of gasoline at 
the facility or station does not exceed 50,000 
gallons, if the tanks are piermanently equipped 
with submerged fill pipes; 

(6) any tanks used exclusively to test the fuel dis- 
pensing meters. 

(d) With exceptions stated in Paragraph (c) of this Rule, 
gasoline shall not be transferred from any delivery vessel 
into any stationary storage tank unless: 

(1) The tank is equipped with a submerged fill pipe, 
and the vapors displaced from the storage tank 
during filling are controlled by a vapor control 
system as described in Paragraph (e) of this 
Rule; 

(2) The vapor control system is in good working 
order and is connected and operating with a 
vapor tight connection; 

(3) The vapor control system is properly maintained 
and all damaged or malfunctioning components 
or elements of design are repaired, replaced or 
modified; 

(4) Gauges, meters, or other specified testing de- 



1533 



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November 1, 1995 



10:15 



PROPOSED RULES 



vices are maintained in proper working order; 

(5) The delivery vessel and vapor collection system 
complies with Rule .0932 of this Section; and 

(6) The following records, as a minimum, are kept 
in accordance with Rule .0903 of this Section: 

(A) the scheduled date for maintenance or the date 
that a malfunction was detected; 

(B) the date the maintenance was performed or the 
malfunction corrected; and 

(C) the component or element of design of the 
control system repaired, replaced, or modified. 

(e) The vapor control system required by Paragraph (d) 
of this Rule shall include one or more of the following: 

(1) a vapor-tight line from the storage tank to the 
delivery vessel and: 

(A) for a coaxial vapor recovery system, either a 
f)oppeted or unpoppeted vapor recovery adap- 
tor; 

(B) for a dual point vapor recovery system, 
poppeted vapor recovery adaptor; or 

(2) a refrigeration-condensation system or equivalent 
designed to recover at least 90 percent by weight 
of the organic compounds in the displaced 
vapor. 

(f) If an unpoppeted vapor recovery adaptor is used 
pursuant to Part (e)(1)(A) of this Rule, the tank liquid fill 
connection shall remain covered either with a vapwr-tight 
cap or a vapor return line except when the vapor return line 
is being connected or disconnected. 

(g) If an unpoppeted vapor recovery adaptor is used 
pursuant to Part (e)(1)(A) of this Rule, the unpoppeted 
vapor recovery adaptor shall be replaced with a poppeted 
vapor recovery adaptor when the tank is replaced or is 
removed and upgraded. 

(h) Where vapor lines from the storage tanks are mani- 
folded, poppeted vapxjr recovery adapters shall be used. No 
more than one tank is to be loaded at a time if the manifold 
vapxDr lines are size 2 '/i inches and smaller. If the manifold 
vapor lines are 3 inches and larger, then two tanks at a time 
may be loaded. 

(i) Vent lines on tanks with Stage I controls shall have 
pressure release valves or restrictors. 

(j) The vapor-laden delivery vessel: 

(1) shall be designed and maintained to be vapor- 
tight during loading and unloading operations 
and during transport with the exception of 
normal pressure/vacuum venting as required by 
regulations of the Department of Transportation; 
and 

(2) if it is refilled in North Carolina, shall be re- 
filled only at: 

(A) bulk gasoline plants complying with Rule 
.0926 of this Section, or 

(B) bulk gasoline terminals complying with Rule 
.0927 of this Section or Rule .0524 of this 
Subchapter. 



Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

.0934 COATING OF MISCELLANEOUS METAL 
PARTS AND PRODUCTS 

(a) For the purpose of this R e gulation Rule, the following 
definitions apply: 

(1) "Heat sensitive material" means materials that 
cannot be exposed to temperatures greater than 
180°F to 200°F. 

(2) "Air dried coating" means coatings which are 
dried by the use of air or a forced air drier. 

(3) "Clear coat" means a coating which lacks color 
and opacity. 

(4) "Extreme performance coatings" means coatings 
designed for harsh exposure or extreme environ- 
mental conditions. 

(5) "Extreme environmental conditions" means 
exposure to: 

(A) the weather at all times; 

(B) temperatures consistently above 203°F; 

(C) detergents, scouring, solvents, or corrosive 
atmospheres; or 

(D) other similar envirormiental conditions. 

(b) This Regulation Rule applies to application areas, 
flashoff areas, ovens and other processes that are used in the 
coating of metal f>arts and products of the following tyjjes of 
manufacturing plants: 

(1) large farm machinery including harvesting, 
fertilizing and planting machines, tractors, 
combines, and other similar machines; 

(2) small farm machinery including lawn and garden 
tractors, lawn mowers, rototillers, and other 
similar machines; 

(3) small appliances including fans, mixers, blend- 
ers, crock pots, dehumidifiers, vacuum cleaners, 
and other similar machines; 

(4) commercial machinery including computers and 
auxiliary equipment, typewriters, calculators, 
vending machines, and other similar machines; 

(5) industrial machinery including pumps, compres- 
sors, conveyor components, fans, blowers, 
transformers, and other similar machines; 

(6) fabricated metal products including metal cov- 
ered doors, frames and other similar structures; 
and 

(7) any other manufacturing plant that coats metal 
parts or products. 

(c) This Regulation Rule does not apply to: 



(1) 



(2) 
(3) 
(4) 
(5) 
(6) 



sources covered by R e gulationo Rule .0917, 

.0918, .0919, .0922, .0923, and .0924 of this 

Section; 

architectural and maintenance coating; 

coating of airplane exterior; 

automobile refinishing; 

customized coating of automobiles and trucks; or 

exterior of marine vessels. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1534 



PROPOSED RULES 



(d) With the exception stated in Paragraph (e) of this 
Rule, emissions of volatile organic compounds from any 
coating line subject to this Regulation Rule shall not exceed: 

(1) 10.3 pounds of volatile organic compounds per 
gallon of solids delivered to a coating applicator 
that applies clear coatings; 

(2) 6.7 pounds of volatile organic compounds per 
gallon of solids delivered to a coating applicator 
in a coating application system that utilized air 
or forced air driers; 

(3) 6.7 pounds of volatile organic compounds per 
gallon of soUds delivered to a coating applicator 
that applies extreme performance coatings; 

(4) 5.1 pounds of volatile organic compounds per 
gallon of solids deUvered to a coating applicator 
that applies coatings of frequent color changes or 
of a large number of colors or applies the coat- 
ing that is the first coat on untreated ferrous 
substrate; or 

(5) where there are no or infrequent color changes 
or a small number of colors is applied: 

(A) 0.4 pounds of volatile organic compounds per 
gallon of solids delivered to a coating applica- 
tor that applies fKDwder coatings; or 

(B) 5.1 pounds of volatile organic compounds per 
gallon of solids deUvered to a coating applica- 
tor for any other type of coating. 

Whenever more than one of the aforementioned emission 
limitations may apply to a process, then the least stringent 
emission limitation shall apply to the process. 

(e) Any source which has chosen to control emissions of 
volatile organic compounds under Rule .0518(e) of this 
Subchapter and which has installed air pollution control 
equipment in accordance with an air quality permit in order 
to comply with this Rule before December 1, 1989, may 
comply with the limits contained in this Paragraph instead 
of those contained in Paragraph (d) of this Rule. Emissions 
of volatile organic compounds from any coating line subject 
to this R e gulation Rule shall not exceed: 

(1) 4.3 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, delivered to a coating applicator that 
applies clear coatings; 

(2) 3.5 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, delivered to a coating applicator in 
a coating application system that utilized air or 
forced air driers; 

(3) 3.5 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, deUvered to a coating applicator that 
applies extreme performance coatings; 

(4) 3.0 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compounds, deUvered to a coating applicator that 
appUes coatings of frequent color changes or of 
a large number of colors or applies the coating 



that is the first coat on untreated ferrous sub- 
strate; or 
(5) where there are no or infrequent color changes 
or a small number of colors is applied: 

(A) 0.4 pounds of volatile organic compounds per 
gallon of coating, excluding water and exempt 
compwunds, delivered to a coating applicator 
that applies powder coatings; or 

(B) 3.0 pounds of volatile organic compounds per 
gallon, excluding water and exempt solvents, 
deUvered to a coating applicator for any other 
type of coating. 

Whenever more than one of the aforementioned emission 
limitations may apply to a process, then the least stringent 
emission limitation shall apply to the process. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

.0935 FACTORY SURFACE COATING OF FLAT 
WOOD PANELING 

(a) For the purpose of this R e gulation Rule , the following 
defmitions apply: 

(1) "Class n hardboard paneling finishes" means 
finishes which meet the specifications of Volun- 
taiy Product Standard PS-59-73 as approved by 
the American National Standards Institute. 

(2) "Hardboard" is a panel manufactured primarily 
from inter-felted UgnoceUulosic fibers which are 
consolidated under heat and pressure In a hot- 
press. 

(3) "Hardwood plywood" means plywood whose 
surface layer is a veneer of hardwood. 

(4) "Natural finish hardwood plywood panel" means 
a panel whose original grain pattern is enhanced 
by essentially transparent fmishes frequently 
supplemented by fillers and toners. 

(5) "Particle board" means a manufactured board 
made of individual wood particles which have 
been coated with a binder and formed into flat 
sheets by pressure. Thin particleboard has a 
thickness of one-fourth Inch or less. 

(6) "Printed panel" means a panel whose grain or 
natural surface is obscured by fillers and 
basecoats upon which a simulated grain or 
decorative pattern is printed. 

(7) "Tileboard" means paneling that has a colored 
waterproof surface coating. 

(b) This Regulation Rule applies to factory fmishing of 
the following flat wood products: 

(1) printed interior wall panels made of hardwood 
plywood and thin particleboard; 

(2) natural fmish hardwood plywood panels; and 

(3) class n finishes of hardboard paneling. 

(c) This R e gulation Rule does not apply to the following 
factory finished flat wood products: 

(1) exterior siding, 



1535 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



(2) tileboard, 

(3) particleboard used in cabinetry or furniture, 

(4) insulation board, or 

(5) softwood plywood. 

(d) Emissions of volatile organic compounds from any 
factoiy finished flat wood product operation subject to this 
Regulation Rule shall not exceed: 

(1) 6.0 pounds of volatile organic compounds per 
1 ,000 square feet of coated finished product of 
printed interior wall panels made of hardwood 
plywood and thin particle board, or 

(2) 12.0 pounds of volatile organic compounds per 
1 ,000 square feet of coated finished product of 
natural finish hardwood plywood panels, or 

(3) 10.0 pounds of volatile organic compounds per 
1 ,000 square feet of coated finished product of 
class n finishes on hardboard paneling. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

.0937 MANUFACTURE OF P^fEUMATIC 
RUBBER TIRES 

(a) For the purpose of this Regulation Rule , the following 
definitions apply: 

(1) "Bead dipping" means the dipping of an assem- 
bled tire bead into a solvent based cement. 

(2) "Green tires" means assembled tires before 
molding and curing have occurred. 

(3) "Green tire spraying" means the spraying of 
green tires, both inside and outside, with release 
compounds which help remove air from the tire 
during molding and prevent the tire from stick- 
ing to the mold after curing. 

(4) "Pneumatic rubber tire manufacture" means the 
production of passenger car tires, light and 
medium truck tires, and other tires manufactured 
on assembly lines. 

(5) "Tread end cementing" means the application of 
a solvent based cement to the tire tread ends. 

(6) "Undertread cementing" means the appUcation of 
a solvent based cement to the underside of a tire 
tread. 

(b) This Regulation Rule appUes to undertread cementing, 
tread end cementing, bead dipping, and green tire spraying 
operations of pneumatic rubber tire manufacturing. 

(c) With the exception stated in Paragraph (d) of this 
Regulation Rule , emissions of volatile organic compounds 
from any pneumatic rubber tire manufacturing plant shall 
not exceed: 

(1) 25 grams of volatile organic compounds per tire 
from each undertread cementing operation, 

(2) 4.0 grams of volatile organic compounds per tire 
from each tread end cementing operation, 

(3) 1.9 grams of volatile organic compounds per tire 
from each bead dipping operation, or 

(4) 24 grams of volatile organic compounds per tire 



from each green tire spraying operation, 
(d) If the total volatile organic compound emissions from 
all undertread cementing, tread end cementing, bead 
dipping, and green tire spraying operations at a pneumatic 
rubber tire manufacturing facility does not exceed 50 grains 
per tire. Paragraph (c) of this Regulation Rule shall not 
apply. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(5). 

.0951 MISCELLANEOUS VOLATILE ORGANIC 
COMPOUND EMISSIONS 

(a) This Rule applies to all facilities that use volatile 
organic compounds as solvents, carriers, material processing 
media, or industrial chemical reactants, or in other similar 
uses or that mix, blend, or manufacture volatile organic 
compounds for which there is no other applicable rule in 
this Section. 

(b) This Rule does not apply to architectural or mainte- 
nance coating. 

(c) Facilities with potential emissions of volatile organic 
compounds less than 100 tons p>er year shall comply with 
15A NCAC 2D .0518. 

(d) With the exception of Paragraph (b) of this Rule, the 
owner or operator of any facility with the potential to emit 
100 tons per year or more of volatile organic compounds 
shall: 

(1) install and operate control equipment which 
meets the requirements of best available control 
technology as defined in and determined by 
procedures of Rule .0530 of this Section (A new 
best available control technology determination 
and procedure need not be performed if in the 
judgement of the Director a previous best avail- 
able control technology determination is applica- 
ble.); 

(2) limit emissions of volatile organic compounds 
from coating lines not covered by Rules .0917 
through .0924, .0934, or .0935 to no more than 
6 . 7 pounds of volatile organic compounds p>er 
gallon of solids delivered to the coating applica- 
tor; or 

(3) reduce the emissions of volatile organic com- 
pounds firom all sources at the plant site that are 
not covered by Subparagraphs (d)(1) or (2) of 
this Paragraph or another rule in this Section by 
at least 85 percent by weight or down to 40 
pounds per day by destruction or by capture of 
volatile organic compounds in the emission 
stream. (Calculation of capture efficiency shall 
be adjusted to reflect eventual emission to the 
atmosphere as volatile organic compounds except 
for material reused, burned, or reprocessed for 
reuse.) 

Statutory Authority G.S. 143-215. 3(a)(1); 



10.15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1536 



PROPOSED RULES 



143-215. 107(a)(5). 

.0953 VAPOR RETURN PIPING FOR STAGE 
II VAPOR RECOVERY 

(a) Applicability. This Rule applies to any facility located 
in Davidson, Durham, Forsyth, Gaston, Guilford, 
Mecklenburg, or Wake counties or the Dutchville Township 
in Granville county or that portion of Davie county that is 
bounded by the Yadkin River, Dutchman's Creek, NC 
Highway 801, Fulton Creek and back to the Yadkin River: 

(1) that is built after June 30, 1994, or 

(2) whose tanks are replaced or removed for up- 
grades or repairs after June 30, 1994. 

When a new tank is added, the new tank shall comply with 
this Rule. 

(b) Exemptions. The burden of proof of eligibility for 
exemption from this Rule is on the owner or operator of the 
facility. Persons seeking an exemption from this Rule shall 
maintain adequate records of throughput and shall furnish 
these records to the Director upon request. These records 
shall be maintained on file for three years. The following 
facilities are exempt from this Rule based upon the previous 
two years records: 

(1) any facility which dispenses 10,000 gallons of 
gasoline or less per calendar month; 

(2) any facility which dispenses 50,000 gallons of 
gasoline or less per calendar month and is an 
independent small business marketer of gasoline; 

(3) any facility which dispenses gasoline exclusively 
for refueling marine vehicles, aircraft, farm 
equipment, and emergency vehicles; or 

(4) any tanks used exclusively to test the fuel dis- 
pensing meters. 

Any facility that ever exceeds the exemptions given in 
Subparagraphs (1), (2), (3), or (4) of this Paragraph shall be 
subject to all of the provisions of this Rule in accordance 
with the schedule given in Paragraph (e) of this Rule, and 
shall remain subject to these provisions even if the facility's 
later operation meets the exemption requirements. 

(c) Definitions. For the purpose of this Rule, the 
following definitions apply: 

(1) "Affected Facility" means any gasoline service 
station or gasoline dispensing facility subject to 
the requirements of this Rule. 

(2) "CARB" means the California Air Resources 
Board. 

(3) "Certified Stage II Vapor Recovery System" 
means any system certified by the California Air 
Resources Board as having a vapor recovery or 
removal efficiency of at least 95 percent by 
weight. 

(4) "Facility" means any gasoline service station or 
gasoline dispensing facility. 

(5) "ISBM" means independent small business 
marketer. 

(6) "Independent Small Business Marketer of Gaso- 
line" means a facility that qualifies under Section 



324 of the Federal Clean Air Act. 

(7) "Operator" means any person who leases, ojjer- 
ates, controls, or supervises a facility at which 
gasoline is dispensed. 

(8) "Owner" means any person who has legal or 
equitable title to the gasoline storage tank at a 
facility. 

(9) "Stage n Vapwr Recovery" means the control of 
gasoline vapor at the vehicle fill-pipe, where the 
vapors are capmred and returned to a vapor-tight 
underground storage tank or are captured and 
destroyed. 

(10) "Throughput" means the amount of gasoline 
dispensed at a facility during any calendar 
month. 

(11) "VapxDr Recovery Dispenser Riser" means piping 
rising from the vapor recovery piping to the 
dispenser. 

(12) "Vapor Recovery Piping" means vapor return 
piping connecting the storage tank(s) with the 
vapor recovery dispenser riser(s). 

(d) Requirements. Affected facilities shall install the 
necessary piping for future installation of CARB certified 
Stage n vapor recovery system. The vapior piping shall 
extend from the tanks to the pumps. The vapor piping shall 
be installed in accordance with the following requirements: 

(1) Gasoline vapors shall be: 

(A) transferred from each gasoline dispenser to the 
underground storage tank individually, or 

(B) manifolded through a common header from 
which a single return line is connected through 
another manifold to all of the underground 
tanks. 

Each vapor return pipe shall allow the transfer 
of gasoline vapors to the tank from which the 
liquid gasoline is being drawn; 

(2) Pipe diameter must meet manufacturer's specifi- 
cations. If the manufacturer does not specify 
diameters, the following minimum pipe diame- 
ters apply. If the manufacturer only specifies 
diameters for part of the system, the following 
diameters apply for the pipe(s) not specified. 
All fittings, connectors, and joints must have an 
inside diameter equal to the inside diameter of 
the pipe it is attached to. Diameters are speci- 
fied for the number of nozzles which may be 
operated at the same time. 

(A) Vapor Recovery Dispenser Risers 

(i) 3/4" for vapor recovery dispenser risers 

returning vapors from 1 nozzle; or 
(ii) 1 " for vapor recovery dispenser risers 
returning vapors from 2 nozzles; 

(B) Vapor Recovery Piping 

(i) Two inches for one, two, or three nozzles; 
(ii) Two and one half inches for four or five 

nozzles; 
(iii) Three inches for six, seven, eight, or nine 



1537 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



I 



\ 



) 



nozzles; 
(iv) Three and one half inches for 10, 11, or 

12 nozzles; or 
(v) Four inches for more than 12 nozzles; 

(3) All piping and fittings shall be installed in 
accordance with manufacturer's instructions and 
specifications. Metal pipe shall be minimum 
schedule 40 welded or seamless steel per ASTM 
A-53, "Specification for Pipe, Steel, Black and 
Hot-Dipped, Zinc-Coated Welded and Seamless 
Pipe". Fittings shall be 150 pounds cold water 
screwed malleable iron. Pipe and fittings shall 
be galvanized and pipe threads shall be zinc- 
coated. Nonmetallic pipes and fittings shall be 
U/L Hsted under nonmetallic primary pipes and 
fittings for underground flammable liquids (gas 
and oil equipment directory); 

(4) Each vapor return pipe shall slope towards the 
storage tank with a minimum grade of 1/4 
inches per foot. Special care shall be taken to 
ensure that no low points or sags exist along the 
return piping; 

(5) All vapor return and vent piping shall be pro- 
vided with flexible joints or swing joints at each 
tank connection and at the base of the vent pipe 
riser where it fastens to a building or other 
structure; 

(6) All vapor return pipe-trenching shall be com- 
pacted to 90 percent of the standard proctor 
according to ASTM D-698 "Laboratory Com- 
paction Characteristics of Soil Using Standard 
Effort" of the area soil before the pipes are 
installed and back-filled with sand or other 
material approved by the pipe manufacturer at 
least six inches below and above the piping; 

(7) The pipes shall not be driven over or in any 
other way crushed prior to paving or surfacing; 

(8) The vapor return piping or manifolded piping on 
a vacuum assisted system shall enter a separate 
opening to the tank from that connected to the 
vent pipe or the Stage I piping; 

(9) All vapor return piping shall be tagged at the 
termination point recording the function of the 
piping. In addition, a record of the installation 
of the Stage n vapor return piping shall be kept 
in the facility; 

(10) Vent piping shall be constructed of materials in 
accordance with Subparagraph (3) of this Para- 
graph; 

(11) All vent pipes shall be a minimum of two inches 
inside diameter or meet the local Fire Codes; 
and 

(12) All vent pipes shall slope towards the under- 
ground storage tank with a grade of at least 1 /4 
inch per linear foot. 

(e) Compliance Schedule. Compliance under Paragraph 
(d) of this Rule by the affected facility shall coincide with 



the completion of the tank installation or repair. Facilities 
that lose their exemption under Paragraph (b) of this Rule 
shall comply with this Rule within 18 months after the day 
the owner or operator of the facility has been notified by the 
Director that his exemption under Paragraph (b) of this Rule 
has been revoked. 

(f) Testing Requirements. 

(1) Within 30 days after installation of the vapor 
return piping, the owner or operator of the 
facility shall submit reports of the following tests 
to be completed as described in EPA-450/3-91- 
022b: 

(A) Bay Area Source Test Procedure ST-30, Leak 
Test Procedure, or San Diego Test F*rocedure 
TP-91-1, Pressure Decay /Leak Test Proce- 
dure, and 

(B) Bay Area Source Test Procedure ST-27, 
Dynamic Back Pressure, or San Diego Test 
Procedure TP-91-2, Pressure Drop vs 
Flow/Liquid Blockage Test Procedure. 

(2) Testing shall be in accordance with Rule .0912 
of this Section. 

(3) The owner or operator of the facility shall notify 
the Regional Office Supervisor by telephone at 
least five business days before back-filling the 
trenches and at least 10 business days before the 
tests given in Subparagraph (1) of this Paragraph 
are to be jjerformed to allow inspection by the 
Division. The owner or operator may com- 
mence back-filling five days after notification 
has been given to the Division. 

(4) The owner or operator of the facihty and the test 
contractor shall report all test failures to the 
Regional Office Supervisor within 24 hours of 
the failure. 

(5) The Director may require the owner or operator 
of the facility to jjerform any of the tests in 
Subparagraph (1) of this Paragraph if there are 
any modifications or repairs. 

(6) Where the Division conducts a test on the vaf)or 
control system, it shall be without compensating 
the owner or operator of the facility for any lost 
revenues incurred due to the testing procedure. 

(g) Referenced documents 

(1) EPA-450/3-91-022b, "Technical Guidance - 
Stage n Vapor Recovery Systems for Control of 
Vehicle Refueling Emissions at Gasoline Dis- 
pensing Facilities, Volume II: Appendices", 
November 1991, cited in this Rule is hereby 
incorfKjrated by reference and does not include 
subsequent amendments or editions. A copy of 
this document is available for inspection at the 
Regional Offices of the North Carolina Depart- 
ment of Environment, Health, and Natural 
Resources (Addresses are given in Rule .0103 of 
this Subchapter). Copies of this document may 
be obtained through the Library Services Office 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1538 



PROPOSED RULES 



(MD-35), U.S. Environmental Protection 
Agency, Research Triangle Park or National 
Technical Information Services (NTIS), 5285 
Port Royal Road, Springfield V A 22161. The 
NTIS number for this document is PB- 
92132851, and the cost is fifty-two dollars 
($52.00). 
(2) The American Society for Testing and Materials 
(ASTM) specification and test methods cited in 
this Rule are hereby incorfxirated by reference 
including any subsequent amendments and 
editions. A copy of the ASTM specification and 
test method can be obtained from the Air Qual- 
ity Section, Division of Environmental Manage- 
ment, P.O. Box 29525, Raleigh, North Carolina 
27626, at no cost. 

Statutory Authority G.S. 143-215. 3(a)(1); 143-215. 107(a); 
150B-21.6. 

.0954 STAGE n VAPOR RECOVERY 

(a) Applicability. This Rule applies to the control of 
gasoline vapors at the vehicle fill-pipe during refueling 
operations at a facility. The vapors are captured and 
returned to a vapor-tight underground storage tank or are 
captured and destroyed. These systems must be installed at 
all facilities that dispense gasoline to motor vehicles unless 
exempted under Paragraph (b) of this Rule. 

(b) Exemptions. The following gasoline dispensing 
facilities are exempt from this Rule based upon the previous 
two years records: 

(1) any facility which dispenses 10,000 gallons of 
gasoline or less of goaolino during per calendar 
month; 

(2) any facility which dispenses 50,000 gallons of 
gasoline or less during per calendar month and 
is an independent small business marketer of 
gasoline; 

(3) any facility which dispenses gasoline exclusively 
for refueling marine vehicles, aircraft, farm 
equipment, and emergency vehicles; or 

(4) any tanks used exclusively to test the fuel dis- 
pensing meters. 

Any facility that ever exceeds the exemptions given in 
Subparagraphs (1), (2), (3) or (4) in this Paragraph shall be 
subject to all of the provisions of this Rule in accordance 
with the schedule given in Subparagraph (f) of this Rule, 
and shall remain subject to these provisions even if the 
facility's later operation meets the exemption requirements. 

(c) Proof of Eligibility. The burden of proof of eligibility 
for exemption from this Rule is on the owner or operator of 
the facility. Persons seeking an exemption from this Rule 
shall maintain the following: 

(1) chronologically arranged bills of lading for 
receipt of gasoline shipments from the last three 
years, and 

(2) daily inventory of each gasoline type for each 



day of o{>eration or equivalent records as re- 
quired; this shall be maintained for the last three 
years. 
These records shall be furnished to the Director upon 
request. 

(d) Definitions. For the purpose of this Rule, the follow- 
ing definitions apply: 

(1) "CARB" means the California Air Resources 
Board. 

(2) "Certified STAGE 11 Vapor Recovery System" 
means any system certified by the California Air 
Resources Board as having a vapor recovery or 
removal efficiency of at least 95 {jercent by 
weight. 

(3) "Defective equipment" means any absence, 
disconnection, or malfunction of a Stage 11 vapor 
recovery system component which is required by 
this Rule including the following: 

(A) a vapor return line that is crimped, flattened or 
blocked or that has any hole or slit that allows 
vapors to leak out; 

(B) a nozzle bellows that has any hole or tear large 
enough to allow a 1/4 inch diameter cylindrical 
rod to pass through it or any slit one inch or 
more in length; 

(C) a nozzle face-plate or cone that is torn or 
missing over 25 percent of its surface; 

(D) a nozzle with no automatic overfill control 
mechanism or an inoperable overfill control 
mechanism; 

(E) an inoperable or malfunctioning vapor process- 
ing unit, vacuum generating device, pressure 
or vacuum relief valve, vaf>or check valve or 
any other equipment normally used to dispense 
gasoline, or that is required by this Rule; or 

(¥) a failure to meet the requirements of Para- 
graph (g) of this Rule. 

(4) "Facility" means any gasoline service station, 
gasoline dispensing facility, or gasoline cargo 
tanker. 

(5) "ISBM" means independent small business 
marketer. 

(6) "Independent Small Business Marketer of Gaso- 
line" means a facility that qiulifies under Section 
324 of the Federal Clean Air Act. 

(7) "Operator" means any person who leases, oper- 
ates, controls, or supervises a facility at which 
gasoline is dispensed. 

(8) "Owner" means any person who has legal or 
equitable title to the gasoline storage tank at a 
facility. 

(9) "Pressure Balanced Stage 11 System" means one 
which is not vacuum-assisted. That is, the 
volume of vapor in the automobile's fuel tank 
displaced by the incoming liquid gasoline equals 
the space in the undergroimd tank created by the 
gasoline leaving. 



1539 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



(10) "Remote Vapor Check Valve" means a check 
valve in the vapor return line but not located in 
the nozzle. 

(11) "Stage n Vapor Recovery" means to the control 
of gasoline vapor at the vehicle fill-pipe, where 
the vapors are captured and returned to a va- 
por-tight storage tank or are captured and de- 
stroyed. 

(12) "TTiroughput" means the amount of gasoline 
dispensed at a facility during any calendar month 
after June 30, 1994. 

(e) Stage II Requirements. No person shall transfer or 
permit the transfer of gasoline into the fuel tank of any 
motor vehicle at any applicable facility unless: 

(1) the transfer is made using a Certified Stage 11 
vapor recovery system that meets the require- 
ments of the inspections; 

(2) all installed Stage D vajxjr recovery systems use 
coaxial vapor recovery hoses; no dual-hose 
designs shall be used; 

(3) all installed Stage II vapor recovery systems 
used are certified by CARB except that the Stage 
I system need not be CARB certified. In addi- 
tion, no Stage II system shall employ a remote 
vapor check valve. Pressure balanced Stage II 
systems may be used; and 

(4) the underground vapor return piping satisfies the 
requirements of Rule .0953 of this Subchapter. 

In the event that CARB revokes certification of an installed 
system, the owner or operator of the facility shall have four 
years to modify his equipment to conform with re-certifica- 
tion requirements unless modifications involve only the 
replacement of disjjenser check valves, hoses, or nozzles or 
appurtenances to these components in which case the 
allowed time period is three months. This time period is 
defined as the period from the day that the owner or 
operator of the facility has been officially notified by the 
Director. 

(f) Compliance Schedule. Affected gasoline service 
station or gasoline dispensing facilities shall comply with 
this Rule as follows: 

(1) if the gasoline service stations or gasoline dis- 
f)ensing facilities are subject to the requirements 
of this Rule in accordance with Paragraph (c) of 
Rule .0902 of this Section, compliance shall be 
achieved no later than: 

(A) May 1, 1996, for facilities having any single 
monthly throughput of at least 100,000 gallons 
per month; 

(B) May 1, 1997, for facilities having any single 
monthly throughput of greater than 10,000 
gallons but less than 100,000 gallons; 

(C) for affected facilities owned by a single ISBM: 
(i) May 1, 1996, for 33 percent of affected 

facilities; 
(ii) May 1, 1997, for 66 percent of the af- 
fected facilities; 



(iii) May 1, 1998, for the remainder of the 
affected facilities; 
By January 31, 1996, the ISBM shall provide 
the Director with a list detailing specific sched- 
uling of the ISBM station conversion. 

(D) 18 months after the day the owner or ojjerator 
of the facility has been notified by the Director 
that his exemption under Paragraph (b) of this 
Rule has been revoked; or 

(E) before beginning operation for islands con- 
structed after April 30, 1995. 

(2) if the gasoline service station or gasoline dis- 
pensing faciUty is subject to the requirements of 
this Rule in accordance with Paragraph (d) of 
Rule .0902 of this Section, compliance shall be 
achieved no later than: 

(A) one year from the date that the Director no- 
tices in the North Carolina Register that an 
area is in violation of the ambient air quality 
standard for ozone, for facilities having any 
single monthly throughput of at least 100,000 
gallons per month; 

(B) two years from the date that the Director 
notices in the North Carolina Register that an 
area is in violation of the ambient air quality 
standard for ozone, for facilities having any 
single monthly throughput of greater than 
10,000 gallons but less than 100,000 gallons; 

(C) for affected facilities owned by a single ISBM: 
(i) one year from the date that the Director 

notices in the North Carolina Register that 
an area is in violation of the ambient air 
quaUty standard for ozone, for 33 percent 
of affected facilities; 
(ii) two years from the date that the Director 
notices in the North Carolina Register that 
an area is in violation of the ambient air 
quality standard for ozone, for 66 percent 
of the affected facilities; 
(iii) three years from the date that the Director 
notices in the North Carolina Register that 
an area is in violation of the ambient air 
quality standard for ozone, for the remain- 
der of the affected facilities; 

(D) 18 months after the day the owner or operator 
of the facility has been notified by the Director 
that his exemption under Paragraph (b) of this 
Rule has been revoked; or 

(E) before beginning operation for islands con- 
structed after the Director notices in the North 
Carolina Register that an area is in violation of 
the ambient air quality standard for ozone. 

(g) Testing Requirements 

(1) Within 30 days after the commencement of 

ofjeration of the Stage II system and every five 

years thereafter, the owner or operator of the 

facility shall submit reports of the following tests 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1540 



PROPOSED RULES 



as described in EPA-450/3-91-022b: 

(A) Bay Area Source Test Procedure ST-30, Leak 
Test Procedure, or San Diego Test Procedure 
TP-91-1, Pressure Decay/Leak Test Procedure 
every five years; 

(B) Bay Area Source Test Procedure ST-27, 
Dynamic Back Pressure, or San Diego Test 
Procedure TP-91-2, Pressure Drop vs 
Flow/Liquid Blockage Test Procedure every 
five years; and 

(C) Bay Area Source Test Procedure ST-37, 
Liquid Removal Devices every five years. 

If the tests have been performed within the last 
two years the owner or ojjerator may submit a 
copy of those tests in lieu of retesting. Testing 
shall be in accordance with Rule .0912 of this 
Section. 

(2) The owner or operator shall perform daily 
testing and inspections as follows: 

(A) daily tests to ensure proper functioning of 
nozzle automatic overfill control mechanisms 
and flow prohibiting mechanisms, and 

(B) daily visual inspection of the nozzle bellows 
and face-plate. 

(3) The owner or opierator of the facility and the test 
contractor shall report all test failures to the 
Regional Office Supervisor within 24 hours of 
the failure. 

(4) The Director may require the owner or operator 
of the facility to perform any of the tests in 
Subparagraph (1) of this Paragraph if there are 
any modifications or repairs. 

(5) Where the Air Quahty Division conducts tests or 
upon requirement from the Director to test the 
vapor control system it shall be without compen- 
sating the owner or operator of the facilit)' for 
any lost revenues incurred due to the testing 
procedure. 

(h) Operating Instructions and Posting 

(1) The owner or operator of the facility shall post 
operating instructions for the vapor recovery 
svstem on the top one-third of the front of each 
gasoline dispenser to include the following: 

(A) a clear description of how to correctly dispense 
gasoline with the vapor recover>' nozzles, 

(B) a warning that repeated attempts to continue 
dispensing gasoline, after the system has 
indicated that the vehicle fuel tank is full (hy 
automatically shutting off), may result in 
spillage or recirculation of gasoline, 

(C) a telephone number to report problems experi- 
enced with the vapor recovery system to the 
owner or operator of the facility, and 

(D) a telephone number to report problems experi- 
enced with the vaf>or recovery system to the 
Director. 

(2) TTie owner or operator shall provide written 



instructions on site as detailed in EPA-450/3-91- 
022b to insure that employees of the facility 
have an accurate understanding of the operation 
of the system and, in particular, when the sys- 
tem is malfunctioning and requires repair. 
(i) Other General Requirements. The owner or operator 
of the facihty shall conspicuously post "Out of Order" signs 
on any nojizle associated with any aboveground part of the 
vapor recovery system which is defective until the system 
has been repaired to bring it back into compliance with this 
Rule. 

(j) Record-keeping and Reporting. Owners or operators 
of the facility shall maintain records in accordance with 
Rule .0903 of this Section on compliance and testing. 

(k) Referenced document. EPA-450/3-91-O22b, "Techni- 
cal Guidance - Stage n Vapor Recovery Systems for Control 
of Vehicle Refueling Emissions at Gasoline Dispensing 
Facilities, Volume 11: Appendices", November 1991, cited 
in this Rule is hereby incorporated by reference and does 
not include subsequent amendments or editions. A copy of 
this document is available for inspection at the Regional 
Offices of the North Carolina Department of Environment, 
Health, and Natural Resources (addresses are given in Rule 
.0103 of this Subchapter). Copies of this document may be 
obtained through the Library Services Office (MD-35), U.S. 
Environmental Protection Agency, Research Triangle Park 
or National Technical Information Services, 5285 Port 
Royal Road, Springfield VA 22161. The NTIS number for 
this document is PB-92 132851 and the cost is fifty-two 
dollars ($52.00). 

Stamtory Authority G.S. 143-215. 3(a)(1); 143-215. 107(a); 
1508-21. 6. 

SECTION .1300 - OXYGENATED GASOLINE 
STANDARD 

.1301 PURPOSE 

This Section sets forth oxygenated gasoline standards in 
areas where an oxygenated gasoline program is implemented 
pursuant to State law for all gasoline sold wholesale for use 
or for all gasoline sold retail, offered for use, dispensed, or 
otherwise provided for use in any spark-ignition engine 
other than aircraft in the areas defined in Rule . 1302 of this 
Section during the time periods defined in Rule . 1302(c) sad 
. IjQ ' ICb) of this Section. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(3), (7). 

.1302 APPLICABILITY 

fft^ — TTiis Section applioo to gasoline identified in Rule 
.1301 of this Section during the timo jK > riod doscribod in 
Paragraph (o) of this Rul e in th e Ral e igh/Durham Metropoli 
tan StntiDtiool i\rea ooncioting of E>urbam, Franklin, Orang e , 
and Woke Countioo. 

(b) (a) This Section shall apply to gasoline identified in 



1541 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



Rule .1301 of this Section during the time period described 
in Paragraph (c) of this Rule in any of the following areas, 
and in that area only, when the Director notices in accor- 
dance with Paragraph (b) of dus Rule in the North Carolina 
Register that tho area is in violation of oxygenated gasoline 
is needed in that area to attain and maintain the ambient air 
quality standard for carbon monoxide: 

(1) the Greensboro/ Winston-Salem/High Point 
Metropolitan Statistical Area consisting of 
Davie, Davidson, Forsyth, Guilford, Randolph, 
Stokes, and Yadkin Counties; 

(2) the Charlotte/Gastonia/Rock Hill Metropolitan 
Statistical Area consisting of Cabarrus, Gaston, 
Mecklenburg, and Union Counties; and 

(3) the Raleigh/Durham Metropolitan Statistical 
Area consisting of Durham, Franklin, Orange, 
and Wake Counties. 

ViolationB of th e ambi e nt air quality standard for oarbon 
monoxide shall bo dot e rminod in aooordonoo with '10 CFR 

gQ 3 

(b) If a violation of the ambient air quality standard for 
carbon monoxide is measured in accordance with 40 CFR 
50.8 in one of the areas named in Paragraph (a) of this 
Rule, the Director shall initiate analyses to determine if 
additional measures are needed to attain and maintain the 
ambient air quality standards in that area. If the Director 
finds that 2.7 percent oxygen by weight oxygenated gasoline 
is needed, the Director shall notice in the North Carolina 
Register by the following September i that only oxygenated 
gasoline shall be sold in that area beginning on the following 
November L. The notice shall identify the area in which 
oxygenated gasoline shall be sold. Also by the following 
September 1. the Director shall notify the Gasoline and Oil 
Inspection Board and the primary gasoline distributors that 
only oxygenated gasoline shall be sold in the area beginning 
on the following November J^ 

(c) This Section applies to gasoline identified in Rule 
.1301 of this Section and in the counties identified in 
Paragraph (a) or (b) of this Rule for the four-month period 
beginning November 1 and running through the last day of 
February of the following year. 

(d) Gasoline in storag e : storage 

(4^ within tho oountioo idontifiod in Paragraph (a) of 

this Rule prior to Novombor 1 or 
(3) within the counties identified in Paragraph (a) of 
this Rule prior to November 1 of the year in 
which this Section goes into effect 
at a dispensing facility having total gasoline tank capacity of 
less than 550 gallons or a total weekly dispensing rate of 
less than 550 gallons is exempted from Rule . 1304 of this 
Section, but any gasoline supplied to the facility during the 
period identified in Paragraph (b) or (c) of this Rule shall 
comply with Rule .1304 of this Section. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(3),(7). 



.1304 OXYGEN CONTENT STANDARD 

(^ Gasoline to which this Section applies in accordance 
with Rule . 1302(b) {a} of this Section shall have an oxygen 
content of not less than 2.7 jjercent by weight during the 
period defined in Rule .1302(c) of this Section. 

(b) Gasoline to which thi s S e ction appli e o in aooordonoo 
with Rul e .1302(a) of this Sootion ohall have an oxyg e n 
content of not looa than: 

(4) 2.7 percent by woight until February 2 8 , 1995; 

9^ 



(^ 



2.0 poroont by weight after Octob e r 31> 1995 to 

February 2 8 , 2000; 

2.2 poroont by woight aftor October 31, 2000 to 

Fobruory 2 8 , 2005; and 

(4) 2.6 percent by w e ight aft e r Gotober 31, 2005 

during th e p e riod d e fin e d in Paragraph (o) of Rul e . 1302 of 
this Sootion. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(3). (7). 

SUBCHAPTER 2Q - AIR QUALITY PERMIT 
PROCEDURES 

SECTION .0400 - ACID RAIN PROCEDURES 

.0401 PURPOSE AND APPLICABILITY 

(a) The purpose of this Rule is to implement Phase n of 
the federal acid rain program pursuant to the requirements 
of Title IV of the Clean Air Act as provided in 40 CFR Part 

IL 

(b) (a) The procedures and requirements under this 
Section do not apply until the EPA approves this Section 
and Section .0500 of this Subchapter. 

(c) A pplicability. 

(b) £1} Each of the following units shall be an 

affected unit, and any facility that includes such 

a unit shall be an affected facility, subject to the 

requirements of the Acid Rain Program: 

(4) (A) A unit listed in 40 CFR Part 73, Subpart 

B, Table 1. 
(3) £B} A unit that is identified as qualifying for 
an allowance allocation under 40 CFR 73.10 
Table 2 or 3 S e ctions 403 and -105 of the 
fodoral Clean Air Act and any other existing 
utihty unit, except a unit under Subparagraph 
(2) of this Paragraph Paragraph (o) of this 

(^ £Ci A utility unit, except a unit under Sub- 
paragraph (2) of this Paragraph Paragraph (o) 
of this Rul e, that: 

£i} is a new unit; er 
(ii) did not serve a generator with a 
nameplate capacity greater than 25 MWe 
on November 15, 1990, but serves such a 
generator after November 15, 1990Ti 
was a simple combustion turbine on No- 
vember 15. 1990 but adds or uses auxil- 



(A) 
(B) 



(iii) 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1542 



PROPOSED RULES 



iary firing after November 15. 1990; 
(iv) was an exempt cogeneration facility under 
Part (2)(D) of this Paragraph but during 
any three calendar year period after No- 
vember 15, 1990, sold to a utility power 
distribution system, an annual average of 
more than one third of its potential electri- 
cal out-put capacity and more than 
219.000 MWe-hrs electric output, on a 
gross basis; 
(v) was an exempt qualifying facility under 
Part (2)(E) of this Paragraph but at any 
time after the later of November 15, 1990. 
or the date the facility commences com- 
mercial operation, fails to meet the defini- 
tion of qualifying facility, 
(vi) was an exempt independent power produc- 
tion facility under Part (2)(F) of this Para- 
graph but at any time after the later of 
November 15. 1990, or the date the facil- 
ity commences commercial operation, fails 
to meet the definition of independent 
power production facility; or 
(yji) was an exempt solid uaste incinerator 
under Part (2)(G) of this Paragraph of this 
Rule but during any three calendar year 
period after November 15, 1990, con- 
sumes 20 p>ercent or more (on a Btu basis) 
fossil fuel. 
(e) {2} The following t>pes of units are not affected 
units subject to the requirements of the Acid 
Rain Program: 
f4-) £A} A simple combustion turbine that com- 
menced operation before November 15, 1990. 
(S) (B) Any unit that commenced commercial 
operation before November 15, 1990, and that 
did not, as of November 15, 1990, and does 
not currently, serve a generator with a name- 
plate capacity of greater than 25 MWe. 
(3) (Cj Any unit that, during 1985, did not serve 
a generator that produced electricity for sale 
and that did not, as of November 15, 1990, 
and does not currently, serve a generator that 
produces electricity for sale. 
f4) (D) A co-generation facility Co generation 
units, which: 
(i) for a unit that commenced construction on 
or prior to Nosember 15, 1990, was con- 
structed for the purpose of supplying equal 
to or less than one-third its potential elec- 
trical output capacity or equal to or less 
than 219.000 MWe-hrs actual electrical 
output on an annual basis to any utility 
power distribution system for sale (on a 
gross basis). If the purpose of construc- 
tion is not kno\<.n. it will be presumed to 
be consistent uith actual operation from 



(ii) for units that 



^ 



1985 through 1987. However, if in any 
three calendar year period after November 
15. 1990. such unit sells to a utility power 
distribution system an annual average of 
more than one-third of its potential electri- 
cal output capacity and more than 219,000 
MWe-hrs actual electrical output (on a 
gross basis), that unit shall be an affected 
unit, subject to the requirements of the 
Acid Rain Program, or 
for units that commenced construction 
after November 15, 1990, supplies equal 
to or less than one-third its potential elec- 
trical output capacity or equal to or less 
than 219. CKX) MWe-hrs actual electrical 
output on an annual basis to any utility 
power distribution system for sale (on a 
gross basis). However, if in an^ three 
calendar year period after November 15. 
1990. such unit sells to a utility power 
distribution system an annual average of 
more than one-third of its potential electri- 
cal output capacity and more than 219.000 
MWe-hrs actual electrical output (on a 
gross basis), that unit shall be an affected 
unit, subject to the requirements of the 
Acid Rain Program. 
(E) A qualifying facility Qualifying facilitioo, 
which Qjo qualifying amall production facilitiiM 
within th e m e aning of S e ction 3(17)(C) of the 

F e d e ral Pow e r A«t »f — a qualif>'ing 

cogoneration faoility within the meaning ef 
Section 3(18)(B) of the Federal Powor Act. 
that: 
£i} has, as of November 15. 1990. one or 
more qualifying power purchase commit- 
ments to sell at least 15 percent of its total 
planned net output capacity; and 
(ii) consists of one or more units designed by 
the owner or operator with total installed 
net output capacity not exceeding 130 
percent of the total planned net output 
capacity. If the emissions rates of the 
units are not the same, the Administrator 
uill designate uhich units are exempt. 
(6) (F) An Now indepiendent power production 
facility faoilitioo. that: 
(i] has, as of November 15, 1990, one or 
more qualifying power purchase commit- 
ments to sell at least 15 percent of its total 
planned net output capacity; and 
£ii} consists of one or more units designed by 
the owner or operator with total installed 
net output capacity not exceeding 130 
percent of the total planned net output 
capacity. If the emissions rates of the 
units are not the same, the Administrator 



1543 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



will designate which units are exempt. 
f) {G) A solid Solid waste incinerator, inoin e m ' 
tefSr if more than 80 percent (on a Btu basis) 
of the annual fiiel consumed at such incinerator 
is other than fossil fuels. For a solid waste 
incinerator which began operation before 
January \^ 1985, the average annual fuel 
consumption of non-fossil fuels for calendar 
years 1985 through 1987 must be greater than 
80 percent for such an incinerator to be ex- 
empt. For a solid waste incinerator which 
began operation after January J^ 1985. the 
average annual fuel consumption of non-fossil 
fuels for the first three years of operation must 
be greater than 80 percent for such an inciner- 
ator to be exempt. If. during any three calen- 
dar year period after November 15. 1990. 
such incinerator consumes 20 percent or more 
(on a Btu basis) fossil fuel, such incinerator 
will be an affected source under the Acid Rain 
Program. 
(*) £Hi A non-utility unit. 
(3) A certifying official of any unit may petition the 
Administrator for a determination of a pplicabil- 
ity under 40 CFR 72.6(c). The Administrator's 
determination of applicability shall be binding 
upon the Division, unless the petition is found to 
have contained significant errors or omissions. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

.0402 ACID RAIN PERMITTING PROCEDURES 

(a) For the purpose of this Rule the definitions contained 
in 40 CFR 72.2 and the measurements, abbreviations, and 
acronyms contained in 40 CFR 72.3 shall apply. 

(b) Affected units as defined in 40 CFR 72.6 and Sub- 
paragraph (c)(1) of Rule .0401 of this Section shall comply 
with the permit, monitoring, sulfur dioxide, nitrogen oxides, 
excess emissions, recordkeeping and reporting, liability, and 
any other provisions as required in 40 CFR Part 72. The 
term "permitting authority" shall mean Division of Environ- 
mental Management, and the term "Administrator" shall 
mean the Administrator of the United States Environmental 
Protection Agency. 

(c) If the provisions or requirements of 40 CFR part 72 
conflict with or are not included in Section .0500 of this 



Subchapter, the Part 72 provisions and requirements shall 

apply and take precedence. 
The terms used in thio Sootion shall hav e th e m e oningo o e t 

forth in th e fodoral Cloon Air Aot and in this Subchapt e r as 

follows: 

(4^ "Acid — Fftifl — omissions — reduction — rcyquiromont" 

moans a roquirom e nt und e r the Aoid Rain Pro 
gram to roduo e th e e mioBiono of sulfur dioxid e or 
nitrogen oxides from a unit to a 3{)ocifiod lovol or 
by a spocifiod poroontago. 



(3) "Aoid Rain Program" moona the national Bulfiif 

dioxid e and nitrog e n oxid e s air pollution control 
and omissions r e duotion program e stablished in 
aocordonoo with Title IV. 
"Act" moons the Clean Air Aot. 42 U.S.C. 7 4 01, 



(4)- 






(40)- 



e t. o e q. as am e nd e d by Public Law No. 101 519 

(Nov e mb e r 15. 1990). 

"Administrator" moans tho administrator of the 



Unitod StatoB Environmontol Protootion Agoncy 

(EPA) or the Administrators'o duly authorized 

roprooontativ e . 

"Affoctod Faoilit>'" moons a facility that includoa 



ono Of more affootod units. 
"Affoctod Unit" m e ans a unit that is subjoot to any 
aoid rain e missions r e duotion r e quir e m e nt or aoid 
Htin omissions limitation. 

f?) "Allocate or allocation" moons tho initial crediting 

of an ollowonoo by th e Administrator to on allow 
ano e Tracking System unit aooount of g e n e ral 
account. 

(8) "Allowanoo" moons an authorization by tho Ad 

ministrator under tho Acid Rain Program to emit 
up to on e ton of sulfur dioxid e during or aft e r a 
spocifiod calendar year. 

(9) "Allowance deduction" or "deduct" when referring 

to allowonooo means tho p e rmanent withdrawal of 
allowano e s by th e Administrator from an Allow ■ 
once Tracking System compliance subaccount to 
account for tho number of tho tons of s ulfur 
dioxid e e missions from on aff e ot e d unit for tho 
cal e ndar y e ar, for tonnage emiosions e stimatos 
calculated for pwriods of missing data as provided 
in 4 CFR port 75. or for any other allowance 
surrondor obligations of th e Acid Rain Program. 
"Allowono e tracking system" m e ons tho Aoid Rain 
Program systom by ■ ^ hioh tho Administrn tef 
allocatoQ. rooords, deducts, and tracks allowanooa. 

(44) "C e rtificat e of r e pr e s e ntation" moons th e oom 

pl e ted and sign e d oubmisaion roquirod by 10 CFR 
72.30. for oortifying tho appointment of a dosig 
noted roprosentative for on affoctod facility or 
group of identified aff e oted faoiliti e e authoriz e d to 
r e pr e s e nt th e own e rs and operators of ouch faoil 
ity(facilities) and of tho affoctod units at such 
facility (facilitio s ) with regard to matters under tho 
Aoid Rain Program. 
of this (43) "Comm e nc e d oommoroial operation" — m e ans to 



hove begun to gonemte oloctricit)' for solo, includ 
ing tho solo of tost generation. 

(45) "D e signat e d repres e ntativ e " m e ons o responsibl e 

natural p e rson authoriz e d by th e own e rs and 
operators of an affoctod facilit)^ and of all the 
affoctod units at the focilit)', as evidenced by a 
c e rtificat e of representation submitt e d in aooor 
donee widi CFR 10 Port 73, Subpart B. to r e pr e 
sont and legally bind ooch o^'nor and operator, qa 
matter of federal law, in matters pertaining to 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1544 



PROPOSED RULES 



fM^ 



ft#^ 



{Wt 



(W>- 



^m- 



{m- 



9m- 



oif- 



(33^ 



(3^ 



04)- 



(35)- 



tho Acid Rain Program. WTionovor the torm 

"rooponoible offioiar io uood in thio Subohapt i 3r it 

shall b e doom e d to r e f e r to tha "d a oignated r e pr e 

aontativo" with regard to all mattopo undor tho 

Acid Rain Program. 

"Droft p e rmit" moanc th e v e roion of the p e rmit, or 

tho aoid rain portion of on op e rating permit, that 

a p>ormitting authority offers for public commont. 

"Facility" mc<mB any oont i guou i B group of one or 

mor e oouro e o. 

"Gen e ral acoount" m e ans on Allo' . ' . 'ano e Tracking 

System account — that is not a unit account. 

"Generator" — moons — aay — device — that — produces 

olootrioity and was or would have b ee n r e quir e d to 

bo r e ported as a g e n e rating unit purouont to th e 

United States Department of Energy Form 8 60 

(1990 ed i tion). 

"mmBtu" — m e ans — millions of British Th e ra fll- 

Unite. 

"MWo" moons megawatts of oloctricity. 

"NADB" moons tho National iMlowanco Data 



(36^ 



"Nam e plato capocit)'" m e ans th e maximum olootri 
cal generating output (exprossod in MWo) that a 
generator can sustain ovor a spocifiod poriod of 
tim e wh e n not r e otriot e d by s e oiwnal or other 
d e ratings, as list e d in th e NADB und e r th e data 
field "N^^MECJ\P" if tho gonorator is listed in tho 
NADB or as measured in accordance with the 
Unit e d Stat e s D e partment of En e rgy standards if 
tho gonorator io not list e d in th e NADB. 
"Offset plan" moons a plan pursuant to 40 CFR 
part 77 for offsetting exoesa emissions of sulfur 
dioxid e that have ooourrod at an aff e ot e d unit in 
any cal e ndar y e ar. 

"Owner or operator" — moons any person who 
operates, control s , or s up>er i 'iseg an affected unit 
or an aff e ot e d facility and shall includ e , but not b e 
limited to, any holding oompony, utility 6>st e m, or 
plant manager of an affected unit or affoctod 
facility. 

"Permit" as it is us e d in this S e ction m e ans th e 
l e gally binding written document, or jxirtion of 
such document, issued by tho Director including 
any permit revisions, specifying the Aoid Rain 
Program roquir e m e nto applicable to an affootod 
facility, to e ach affect e d unit at an aff e ct e d faoil 
ity, and to the owners and operators and tho 
designated ropro s ontative of tho affoctod unit or 
th e aff e oted facility. — In addition, th e p e rmit sha -U 
satisfy^ th e proc e dur e s und e r S e ction .0500 of this 
Subchapter. 

"Permit revision" moons a permit modification, 
fest — traok — modification, — administrativ e — p e rmit 
am e ndment, or automatic permit am e ndm e nt, as 
provided in 4 CFR Port 72, Subpart H. 
"Permitting authority" moons either: 



(37)— 



my- 



tho Administratof, o r 
th e Dir e ctor. 



m)- 



(30)- 



9^ 



(^3)- 



my- 



"Phoc e I utility" rof e re to any of 110 utility planto 
identified by tho EPA and listed in Section 104, 
Table A of tho Act. — Each unit haa a nameplato 
capacity of gr e ater than 100 MW e and e mito 
greater than 2.5 Ibo/mmBtu of sulfur dioxido. 
"Phase II utility" refers to tho Lncluoion of oddi 
tional utilities with capaoitioo greater than 25 
MW e to th e Aoid Rain Program. 
"S e cr e tary of En e rgy" r e f e rs to tho S e or e tor)^ of 
tho United States Dopartmont of Energy or tho 
Socretar)''s duly authorized roproeontativo. 
"Simple Combustion Turbin e " moons a unit that i s 
a rotor)' e ngine driven by a gas undor proosuro 
that is crootod by tho oombustion of any fuel. 
TTiis term includes combined cycle units without 
auxiliary — firing but exoludoo — such unite with 
auxiliary firing. 

"Sourco" means any govommental, institutional, 
commercial or industrial structure, instxillation, 
plant or building that omito or boo tho pot e ntial to 
e mit any r e gulated air pollutant und e r th e Act. 
"Stock" means a structure that includoo ono or 
more fluoo and tho housing for tho fluoa. 
"Unit" — meons — a — fossil — fu e l firod — oombuotion 



device. 

"Utility" moons any person that soils oloctricity. 



(34)- 



Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

.0403 NEW UNITS EXEMPTION 

(a) AppUoabilit)'. Thio Rul e apphoo to any n e w utility unit 
that s e p i ' e s on e or more g e n e rators with total nam e plat e 
capacity of 25 MWe or loss and bums only fuels with a 
sulfur content of 0.05 peroont or loss by weight, oa dotor 
min e d for a sampl e of oooh fu e l d e liv e ry using th e m e thods 
sp e cifi e d in 40 CFR 73.7(d)3. 

(b) Exemption. The designated roprosontative, authorized 
in accordance with 40 CFR 72.20, of a facility that includes 
unit und e r Paragraph (o) of this Rul e may p e tition the 
Dir e ctor for a written exemption for th e unit from o e rtain 
roquiromonta of the Acid Rain Program in aooordonco with 
4 CFR 72.7. 

Statutory A uthority G.S. 143-215.3 (a) (1); 
143-215. 107(a)(8); 143-215.108. 

.0404 RETIRED UNITS EXEMPTION 

(a) Apphoability. This Rul e appli e s to any aff e ot e d unit 
that is r e tired prior to tho issuance (including renewal) of a 
permit for the unit aa a final action by tho Director. 

(b) Ex e mption. TTi e d e signated r e pres e ntativ e , authorized 
in aooordano e with 40 CFT^. Part 72, Subpart B, of a facility 
that includ e e a unit undor Paragraph (a) of this Rule may 
petition tho Director for a written exemption, or to ronow a 



1545 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



written oxomption, for tho unit from oortain roquiromonto of 
40 CFR Part 72 in aooordanoo with 10 CFR 72.8. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

.0405 REQUIREMENT TO APPLY 

(a) Dut>' to apply. Tho dosignatod roprosontativo of any 
facility with an nffoctod unit s hall submit a comploto por mit 
application by th e applioablo deadline in Poragrapho (b) and 
(o) of thio Rul e . — Tho Own e r or Operator shall not op e rat e 
tho facility without a pormit that statoa its Acid Rain 
Program roquiromonto. 

(b) Dottdlin e o: 

fi^ Phao e n. For any faoilit)' with an e xisting unit 

under Subparagraph (b)(1) or (2) of Rulo .0101 
of this Section, tho dosignatod roprosontativo 
ohall oubmit a oompl e to permit applioation 
govoming ouoh unit during Phao e II to th e 
Diroctor on or befor e : 
(A) — Januar)' 1, 1996 for sulfur dioxide; 
(B) — Januar>' 1, 199 8 for nitrog e n oxid e s. 

(3) Now Units. 

(A) — For any facility with a now unit under Part 
(b)(3)(A) of Rulo .0 4 01 of this Section, tho 
designated r e prooontativ e shall submit a com 
pleto pormit applioation gov e rning such unit to 
the Diroctor at looot 2 4 months before tho later 
of Januar)' 1 , 2000, or tho date on which tho 
unit oomm e nooo operation. 



tod a timely and complete pormit applioation. 
Each f> e rmit iooued in aooordiuic e with thio Rul e 
shall hav e a t e rm of five y e ar s oomm e noing on 
itfl effective date. — Each p>ermit shall take of foot 
by tho later of January' 1 , 2000, or, where the 
pormit governs a unit under Subparagraph (b)(3) 
of Rul e .0101 of thio Section, tho deadline for 
monitor certification under 10 CFR Part 75. 

(3) Nitrogen Oxidoo. — Not later than January — ty 

IQOOt the Director oboll roopon tho permit te -add 
the Aoid Rain Program nitrog e n oxid e s require 
monta. Such roopwning shall not affect tho term 
of tho aoid rain portion of a oonstruotion and 
op e ration p e rmit. 

(i) Grandfath e ring of Phas e II Units. — Pursuant te 

the — Federal — Register, — vet: — 57, no. — 22 8 , p. 

55631, units that moot tho following Phase I 

nitrog e n oxides e miosion limitationfl befor e 1997: 

fA) — Oi15 Ib/mmBtu for tangontially firod boilers; 

(B) — 0.50 Ib/mmBtu for dry bottom wall fired 

boiler s ; 

ohall b e e x e mpted from any r e vision in e mission 

limitations pursuant to S e ction 107(b)(2). 



Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215. 108. 

.0406 REQUIREMENTS FOR PERMIT 
APPLICATIONS 



A compl e te p e rmit applioation shall contain th e following 
(^ — Fef — any — facility — with — a — unit — und e r — Part e l e m e nts in a format to b e tyooifiod by th e Administrator: 

(4^ identification of tho affected facility for which tho 

permit application is submitted; 

id e ntification of e ach unit at tho facility' for which 

th e pormit application is submitt e d; 



9^ 



(4>- 
(5>- 



(b)(3)(B) of Rule .0 4 01, tho designated ropro 
sentative shall submit a complete pormit appli 
cation govoming ouch unit to th e Dir e ctor at 
least 21 months b e for e th e lat e r of January 1 , 
2000, or tho date on which the unit bogins to 
serve a generator with a namoplato oapaoity 
gr e at e r than 25 MW e . 

P) Aoid Rain Compliano e Option D e adlin e s. Th e 

doadlinoo for applying for approval of any acid 
rain complianco options shall bo tho deadlines 
sp e cifi e d in th e r e l e vant s e ct i on of 10 CFTt P art 
72, Subpart D and in Section 107 of th e federal 
Clean Air Act and regulation s implementing 
section 4 07 of tho foderal Cloan Air Act. 
(o) Dut)' to R e apply. Tho dooignatod roprosontativo shall 
submit a compl e t e p e rmit application fcr e ach facility with 
an affected unit at least nine months prior to tho expiration .0407 
of an existing pormit governing tho unit during Phase II. 
(d) Four copi e s of all p e rmit applications shall b e submit 
t e d to th e Director. 
(e) — Permit Isouonco Deadline. 



(3) a comploto complianco plan for oach unit, in 

aooordanoo with 4 CFR Part 72, S ubpart D; 
th e standard r e quir e ments under 10 CFR j'art 
72.9; and 
if tho p e rmit applioation i s for Phase II and tho 



unit is a now unit, the date that tho unit ha s 
oomm e no e d or will oomm e no e op e ration and th e 
d e adline for monitor certification. 



w- 



Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

PERMIT APPLICATION SHIELD AND 
BINDING EFFECT OF PERMIT 
APPLICATION 

(a) Onc e a designat e d r e pr e s e ntativ e submits a tim e ly and 
comploto pormit application, tho owner or operator shall bo 
On or before Docombor 31, 1997, tho Diroctor doomed in complianco with the roquiromont to have a pormit 

und e r 40 CFR 72.9(a) and Paragraph (a) of Rul e .0105 of 
this S e ction; provided that any delay in ioouing a permit «« 
not caused by tho failure of the designated roprosontativo to 
submit in a complete and timoly fashion supplemental 



shall issu e a p e rmit for Phas e II for sulfur 
dioxid e to e ach aff e ct e d facility in th e Stat e as 
set forth in 4 CFR 72.73(a); provided that the 
designated roprosontativo for the facility submit 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1546 



PROPOSED RULES 



informntion, as roquirod by tho Dirootor. noco9sar>' to issue 
Q porm rt^ 

fb^ — Prior to tho oarlior of th e date on whioh a p e rmit is 
issued subject to administrative apjXMil or judicial review, an 
affootod unit govomod by and of>oratod in aooordiinoo with 
th e t e rms and roquir e m e nts of a timely and complet e p e rmit 
application shall be de e m e d to b e op e rating in complianc e 
with tho Acid Rain Program and this Section. 

(c) A complete permit application shall bo binding on tho 
ouTiero and operators of th e aff e ct e d faoilit>' and th e aff e ct e d 
units oovorod by tho permit application and ohall bo enforce 
able OS a p>ormit from the date of submission of tho complete 
permit application until the final issuance or denial of a 
permit covering tho units and subj e ct to administrativ e 
appeal or judicial review. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

.0408 COMPLIANCE PLANS 

For each affected unit included in a p>ormit application, a 
compl e te complianc e plan shall follow th e r e quir e ments 
und e r — 10 CFR — 73.10 whor e — "p e rmitting authority" — ie 
replaced with "Director." 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215. 108. 

.0409 PHASE II REP0WT:RING EXTENSIONS 

Tho procedures r e quir e d for a r e powering e xt e nsion shall 
follow the requirom e nto contain e d in 10 CFR 72. 11 wh e r e 
"permitting authority" is replaced with "Diroctor". 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

.0410 PERMIT CONTENTS 

Each p e rmit (including any draft or proposed p e rmit) shal -t 
contain th e following e l e m e nts: 
f4^ all elements required for a complete permit appli 

cation under Rule .0 4 06. as approved or modified 

by th e Dir e ctor; 
(3) th e applicabl e acid rain e misGionB limitation for 

sulfur dioxide; and 
(3^ the applicable acid rain emissions limitation for 

nitrog e n oxid e s. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215. 108. 

.0411 STANDARD REQUIREMENTS 

(a) The standard requirements sot forth in Paragraphs (c) 
through (i) of this Rule shall bo binding on all owners and 
operators (including th e designated r e pr e s e ntativ e ) of the 
aff e ct e d facility and aff e ct e d units at th e faoilit)-. 

fb) — Except OS provided under 4 CFR 72.22. each 
affected facility, including all aff e cted units at the facility, 



shall have one and only ono dooignatod roproc i ODtativo, with 
regard to all matters under the Aoid Rain Program oonoom 
ing th e faoilit>' or any aff e ct e d unit at tho faoilit)' ao pro 
vidod in 4 CFR 72.20. — Each submission under tho Acid 
Rain Program shall bo submitted, signed, and oortifiod by 
the d e signat e d roprecontativ e for all sourc e s on b e half of 
which th e submission is mad e in aooordono e with 10 CFR 

fe) — Permit Requirements. 

fl^ Tli e designat e d r e pr e s e ntativ e of each affootod 

faoilit)' and e ach affootod unit at tho facility^ 

(A) — submit a complete permit application (includ 
ing a compliance plan) und e r this Section in 
accordono e V i ith the deadlin e s speoifiod in Rulo 
.0 4 05; 
(^ — submit in a timely manner any supplemental 
information that th e Director detormin e o is 
n e c e cGOT)' to r e vi e w a p e rmit application and 
issue Of deny a pone kt 

(5) Tho ovMiors or operators of each affected facility 

and e ach aff e cted unit at th e faoilit>' Bhall hav e a 
permit and shall operate th e unit in oompliano e 
with a complete permit application or a supof 
scding permit issued by tho Diroctor. 
fd) — Monitoring Requirements. 

f4-) Th e own e rs and operators of e ach faoilit)' and 

each affected unit at tho facilit)' shall comply 
with all applicable monitoring roquiromonto of 
40 CFR Part 75 and Section 107 of th e f e d e ral 
Cl e an Air Act and rul e s implem e nting Section 
4 07 of the federal Cloan Air Act. 

(3) The — omissions — measurements — recorded — asd 

report e d in acoordono e with 10 CFR Part 75 and 
S e ction 407 of tho federal Cl e an i\ir Aot and 
rules implementing Section 4 07 of tho fodorol 
Clean i\ir Act shall bo used to detormino co a- 
pliano e by th e unit with the aoid rain omissions 
limitations and emissions reduction r e quir e m e nts 
for sulfur dioxide and nitrogen oxides require 
monts under the Acid Rain Program. 

(3) The requirem e nts of 40 CFR Part 75 and r e gula 

tions impl e m e nting Section 407 of th e f e d e ral 
Cloan j\ir Aot shall not affect the rosponsibility 
of the owners and operator s to monitor omis 
sions of other pollutants or oth e r e misoiono 
oharaoteriptioo at tho unit und e r other applioablo 
rcquircmonts of the Act and other provisions of 
tho operating permit for the facility' . 
fe) — Sulfur Dioxid e R e quir e m e nts. 

fi) Th e own e rs and op e rators of e ach facility' and 

oach affected unit at tho facility shall: 
(A) — hold allowances, as of the allowanoe transfer 
d e adlin e , in th e unit's complianc e oubacoount 
(after deductions und e r 10 CFR 73.31(o)) not 
less than the total annual omiosions of sulfur 
dioxide for the previoua calendar year from the 



1547 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



unit; and 
(B) ootnply \\\\h the applicable aoid rain e miooion s 
limitationo for oulfur dioxide. 

(3^ Each ton of sulfiir dioxide omittod in oxcoao of 

the acid rain omioaiono limitations for oulfur 
dioxide oholl oonotitut e a sopamto violation of 
the federal Clean j\ir Act. 

(^) An affected unit ohall bo oubjoot to the require 

montfl under Subp>amgraph (o)( 1 ) of this Rule ao 
follows: 
(A) — starting January' — 1, 3000. an aff e cted unit 
under Subparagraph (b)(1) or (2) of Rule 
■0 4 01; 
^fi) — starting on the later of January' 1, 2000, or th e 
deadline for monitor o e rtifioation und e r '10 
CFR Part 75. an affected unit under Subpara 
graph (b)(3) of Rule .0401. 

(4) Allowonoeo shall b e h e ld in, deduct e d from, or 

transferr e d among Allowanc e Tracking Syst e m 
accounts in accordaneo — with the Acid Rain 
Program. 

(#) An allowance shall not b e d e duct e d, in ord e r to 

comply — with — the — requir e m e nts — und e r — Part 
(eXlX^) of this Rule, prior to the calendar year 
for which the allowance was allocated. 

(^ An allowance allocated by th e Administrator 

under the Aoid Rain Program is a limit e d autho 
rization to emit sulfur dioxide in accordance 
with the Acid Rain Program. — No provioion of 
the Aoid Rain Program, the p e rmit application, 
the permit, or th e p e rmit und e r '10 CFR P art 
72.7 and Part 72. 8 and no provision of law shall 
bo construed to limit the authority of the United 
States to t e rminat e or limit suoh authorization. 

(m An allowanc e allocated by th e Administrator 

under the Acid Rain Program does not constitute 
a property right. 
(I) — Nitrogen Qxid e o Roquiromonto. — Th e own e rs and 
operators of th e faoilit)' and each aff e ct e d unit at th e faoilit)' 
shall comply with the applicable acid rain omissions limitn 
tion established by rules implementing Section 407 of the 
f e d e ral Clean Air Act, oo modifi e d by a p e rmit application 
and a p e rmit in accordanc e with th e r e quir e m e nts of th e 
Acid Rain Program. 

(g^ — Excess Emissions Requirements. The owners and 
op e rators of an aff e ct e d unit that has e xc e ss e missions for 
sulfur dioxide or nitrogen oxid e s in any calendar y e ar shall: 

fi-) pay without demand the p>onalty required, and 

pay upon demand the interest on that penal t)', as 
requir e d by '10 CFR Part 77; and 

(3) submit a proposed offs e t plan and comply svith 

the terms of an approved offset plan, as required 
by 4 CFR Part 77. 
(h) R e cordk ee ping and R e porting Requir e ments. 

fi^ Unl e ss oth e rwis e provid e d, — th e own e rs and 

operators of the faciUt)' and each affected unit at 
the facility shall keep on site at the facility' each 



of the following documents fof a period of five 
years from the date the docum e nt io or e ated; this 
p e riod may b e e xt e nd e d if th e r e is a change in 
applicable roquirentents. at any time prior to the 
end of five years, in writing by the Administr a- 
tor or Dir e ctor: 
(A) — th e c e rtificat e of reprooontation for the dosig 
natod roproaontativo fof the facility and cttoh 
affected unit at the facility and all documents 
that d e monfltrat e th e truth of th e statomonto in 
th e o e rtifioat e of reprooontation) in aooordano e 
with 4 CFR Part 72.24; provided that the 
cortifioatos and documonta shall bo retained on 
site at th e faoilit)' boyond ouch fiv e y e ar period 
until suoh documents are sup e rs e ded booauoo 
of the submission of a new oertifioate of repre 
sontation changing the designated represonta 

(B) — all e miooions monitoring information, in aooor 
danco with 4 CFR Part 75.50(a); 

(€) — copies of all reports, complianoo certifications, 
and oth e r oubmissiono and all r e cords und e r 
th e Aoid Rain Program; and 

(©) — copies of all documento used to oomploto a 
permit application and any other submissie a 
und e r th e Aoid Rain Program or to d e mon 
otmte oompUano e with the requir e m e nts of th e 
Acid Rain Program. 



(3) The designated r epreeontativo shall submit the 

r e ports and complianc e o e rtificationo required 
und e r th e Aoid Rain Program, including thooo 
under 40 CFR Part 72, Subpart I, and 40 CFR 
Part 75. 
(i) Ex e mpt e d Units. 

fl^ Th e ov i Ti e ro and op e rators of oooh unit e x e mpt e d 

under Rule .0 4 03 of this Section shall retain at 
the facilit)' that include s the unit, the records of 
th e r e eultc of th e t e oto required to b e p e rformed 
und e r 40 CFR 72.7(d)(2) and a copy of th e 
purchas e agreements for the fiiel burned in the 
exempted unit, stating the sulfur content of ouch 
fu e l. — Suoh r e cords and dooumento shall bo 
r e tain e d for fiv e y e ars from th e dat e th e y or e 
created. 

^3^ On th e earlier of the date the " W ritten exemption 

e xpir e s, th e dat e a unit e xempted under Rule 
.0403 of this S e ction bums any fu e l with a 
sulfur content in excess of 0.05 percent by 
weight (as determined in accordance with 4 
CFR 72.7(d)(3)), or 34 months prior to th e date 
th e unit first serv e s on e or mor e g e n e rators with 
a total namoplato oapacit)' in excess of 25 MWe, 
the unit ahall no longer bo exempted under Rule 
.0403 of this S e ction and shall b e subj e ct to all 
r e quir e m e nts of th e Acid Rain Program, e xc e pt 

that' 

fA3 — Notwithstanding Rule .0405(b) and (c) of this 



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PROPOSED RULES 



Section, tho dooignatod roproeontative of tho 
faoilit)' that inoludeo tho unit ohall oubmJt a 
oomploto aoid rain p e rmit applioation on th e 
JQtor of January' 1. 1998. or tho dnto that tho 
unit ia no longer oxomptod under Rule .0 4 03 
of thic Sootion; and 
(B) — For purpoooD of applying monitoring r e quir e 
mcnta under 1 CFR Part 75. the unit shall bo 
treated od a new unit that commenced commer 
oial operation on the dat e the unit no long e r 
nrkX i to tho roquiremonto in Rule .0'103(a) of thio 
Section. 

(^^ TTio owners and operatora of a unit exempted 

under Rule ■OIO'I ohall comply with monitoring 
r e quirements in aooordanoo with 40 CFR Part 75 
and will bo allocated allowancoa in aooordanco 
with 4 CFR Part 73. 

(4^ A unit e xempt e d und e r Rule .0104 of this S e e 

tion shall not reoum e operation unlooo th e d e oig 
natcd roprosontat i vo of tho facility that includes 
tho unit submita on Acid Rain permit application 
for tho unit not leoe than 21 months prior to th e 
later of January 1. 2000. or th e dat e th e unit is 
to reaumo operation. — On tho earlier of tho date 
tho written exemption oxpireg or tho date on 
Ac i d Rain permit applioation is submitt e d or is 
requir e d to b e submitt e d und e r this Subpara 
graph, the unit shall no longer bo exempted 
under Rule .0 4 4 of this Section and shall bo 
subj e ct to all r e quirem e nts of 40 CPU Part 72. 
(j) Liability^ 

(4j No ponnit revision shall excuse any violation of 

the roquiromenta of tho Acid Rain Program that 
occurs prior to tho date that tho revision tak e s 
e ff e ct. 

(33 Each affected facility and each affected unit shall 

moot the requiromonts of the Acid Rain Pro 
gram. 

(3) Any provision of tho Aoid Rain Program that 

applie s to on affected facility shall also apply to 
tho owners and op>orators (including tho doaig 
nat e d representative) of such facility and of th e 
affect e d units at th e facility. 

f4) Any provision of tho Acid Rain Program that 

applies to on affected unit shall also apply to tho 
owTioro and op e rators (including th e d e signat e d 
repres e ntativ e ) of such unit. — Exc e pt as provid e d 
under Rule .0 4 09 of this Section, and Sections 
4 07 of tho federal Clean Air Act. and rules 
implementing S e ction 107 of th e federal Clean 
Air Act, and e xc e pt with r e gard to th e r e quir e 
ments applicable to units with a common stack 
under 4 CFR Part 75 (including 4 CFR Parts 
75.16. 75.17. and 75.1 8 ). th e ow^n e rs and op e ra 
tor s and th e designat e d r e pr e s e ntativ e of one 
affected unit shall not be liable for any violation 
by any other affected unit of which they are not 



ownoro or operators and that is at tho aom e 
facility unlooo they ar e own e rs or op e rators of 
that facility. 

{&) Any violation of a provision of 10 CFR Parta 

72, 73, 75, 77, and 7 8 , or rules implomonting 

S e otions 407 of th e f e d e ral Clean Air Act by on 

affect e d unit, or by on own e r or op e rator or 

designated reprosontativo of such unit, shall bo 

a separate violat i on. 

(k) Effect on Oth e r Authoriti e o. No provision of th e Aoid 

Rflin Program, a p e rmit applioation, a p e rmit, or a writt e n 

exemption under Rule .0 4 03 and .0 4 4 of this Section shall 

bo construed as: 

(4) e xcept as e xpressly provid e d in Title IV, ox 

e mpting or e xcluding tho owners and operators 
of an affected facility or affoctod unit from 
compliance with any other provision of tho 
f e d e ral Cl e an Air Act, including tho provioiono 
of Titl e I of tho federal Cl e an Air Act relating to 
applicable national ambient aif quality standards 
or state implementation plana; 

(3) limiting tho number of ollowanooo a unit oon 

hold; provided, that th e numb e r of allowano e o 
held by tho unit shall not affoct tho facility's 
obligation to comply with any other provisions 
of the f e deral Cl e an Air Act or Subchapt e r 2D 
of Titl e 15A; 

(5) requiring a change of any kind in any State law 

regulating electric — utility rates and charges, 
aff e cting any State lav . ' regarding such State 
r e gulation, or limiting ouch Stat e rul e , including 
any prudence roviow requiromonts under such 
State law; 

f4-) modifying the Federal Power Act or aff e oting 

th e authority of th e Fed e ral En e rgy R e gulatory 
Commisaion under the Federal Power Act; or 

f5) intorforing with or impairing any program fof 

oompotitivo bidding for pow e r supply in a Stat e 
in which suoh program io e stablished. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.65; 143-215.66; 143-215.108. 

.0412 PERMIT SHIELD 

Each affected unit opomted in aocordxmco with tho permit 
that gov e mc th e unit and that woo iooued in oompliono e with 
Titl e IV, as provid e d in this Part, 10 CFR Parts 73, 75, 77, 
and 7 8 , and tho rules implomonting Sections 4 07 of tho 
fodorol Clean Ait Act, shall bo deemed to bo operating in 
oompliano e with th e Acid Rain Program, e xo e pt as provided 
in Subparagraph (j)(6) of Rul « .0411 of this S e otion. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

.0413 PERMIT REVISIONS GENERALLY 

(a) Tho permit revision proceduroa shall govern revisions 



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PROPOSED RULES 



to any acid rain portion of any construction and oporation 
permit. 

(fe) — The p e rmit roviflion proo e dur e o ohall aup e ro e d e th e 
pef Hiit revision procoduroo spocifiod in Section .0500 of this 
Subchapter — with regard — to revision of any — Acid Rain 
Program pormit provioion. 

(e^ — A pwrmit rovioion may b e submitt e d for approval at 
any time. — No permit revision shall affect the term of the 
pormit to bo revised. — No pormit revision shall excuse any 
violation of an Aoid Rain Program r e quir e m e nt that oo 
ourrod prior to th e e ff e ctive date of the r e s'ioion. 

(d) Except for minor pormit modifications or administra - 
tive amondmontfl, tho terms of the pormit shall apply while 
the pormit rovioion io ponding. 

(e) — Any d e t e rmination by th e Director or a Stat e court 
modify'ing or voiding any pormit provision shall bo subject 
to review by the Administrator in aooordanoo with 40 CFR 
70. 8 (0), unl e ao the d e termination or int e rpretation io an 



approval and comment during the permit isou 
onc e proo e op; 

(3) addition of a nitrogen oxid e s alt e rnativ e e m k- 

sions limitation demonstration period or a nitro 
gen oxides averaging plan to a permit; of 

(3) changes in a ropoworing plan, nitrog e n oxidos 

av e raging — plan, — nitrog e n — oxid e o — alternative 
omiBoiona limitation domonotration period, o r 
nitrogen oxides compliance deadline ext e nsion- 
Co) P e rmit modifications shall follow tho roquirom e nts of 
Ruloo .O'llO and .0412 of this S e ction and S e ction .0500 of 
this Subchapter. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

.0415 FAST-TRACK MODIFICATIONS 

All fast track modification s applicabl e to souro e o subject 
adminiotmtiv e am e ndm e nt approved in accordance with -Rttle to th e acid rain portion of thi s S e ction oholl follow the 



.0 4 16 of this Section. 

(f) The standard requirements of 4 CFR Part 72.9 shall 
not b e modifi e d or void e d by a p e rmit r e vision. 

(g) — i\ny p e rmit r e vision involving incorporation of a 
complianco option that was not submitted for approval and 
comment during tho perm k-i ssuxmco process, or involving 
a chang e — in a complianc e — option that was pr e viously 
submitted, shall meet the requir e m e nts for applying for ouch 
complianco option under Rule .0409 of this Section and 
Section 4 07 of tho federal Clean Air Act and ruloo imple 
monting S e ction 407 of th e f e d e ral Cl e an Air Act. 

(h) For pormit r e vicions not d e scribed in Rules .0414 and 
.0115 of this Section, tho Director may, at his discretion, 
determine which of those Rules is applicable. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

.0414 PERMIT MODinCATIONS 

(a) Th e following p e rmit r e visions shall follow th e p e rmit 
modification procoduros: 

(4^ relaxation of an oxooao emission offset require 

ment after approval of th e offset plan by th e 
Administrator, 

(3) incorporation of a final nitrogen oxides altema 

tive emission limitation following a domonstra 
tion period, or 
(3) determination of whether — e fforts — to d e sign. 



prooedureo given in 4 CFR 72. 8 where "permitting 
authority" shall be replaced with "Director". 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

.0416 ADMINISTRATIVE FERMTT AMENDMENT 

(a) Th e following r e visions to tho acid rain portion of the 
permit shall follow tho administrative pormit amondmont 
prooedureo! 

ft) activation of a complianc e option conditionally 

approv e d by the Director, provid e d that all 
foquiromonts for activation under 40 CFR Part 
72, Subpart D, are mot; 

(3) chang e s in th e d e signat e d r e pr e s e ntativ e or 

alternative dooignatod r e pr e s e ntativ e , provided 
that a new certificate of representation is submit 

fryj. 

(3) correction of typographical e rror s ; 

(4) changes in nam e s, addr e ss e s, or t e l e phone or 

facsimile numbers; 
(^) ohangeo in the owners or operators, provided 

that a n e w c e rtificat e of r e pr e s e ntation is oubmit 

t e d within 30 days; and 
(6) termination of a compliance option in the per 

mit, provided that thi s procedure shall not bo 

us e d to terminate a r e pow e ring plan aft e r D e 

comber 31, 1999. 
(b) — Administrative amondmonts shall follow tho proco 
duros sot forth under Section .0500 of this Subchapter 



construct, and teat ropoworing technology under 

a ro[x)woring extension plan were in good faith 

and wh e th e r ouch ropow e ring t e chnology was e xcept that ownership chang e s under Subparagraph (a)(5) of 

prop e rly construct e d and t e st e d under 40 CFR 

72.11(g)(l)(i)and(2). 



(b) The following [>ormit revisions shall follow either the 
permit modification proc e dur e s or the fast tmok modification 
proc e dur e s und e r Rul e .0415 of this S e ction: 

(4^ i ncorporation of a complianco option that the 

designated representative did not submit for 



this Rul e shall follow the proc e dures under Rul e .0524 of 
this Subchapter. 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

.0417 AUTOMATIC PERMIT AMENDMENT 



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PROPOSED RULES 



Tho following pwrmit roviaions shall be doomod to amend 
automalioally, and booomo a part of, the aff e oted unit's 
ponnit by op e ration of law without any furth e r r e vi e w: 

(4^ upon rooordfltion by tho Administrator undor 4 

CFR Part 73 all allowanoo allooationfl to, tronafors 
to. and d e duotiono from on affect e d unit's Allow 
ano e Tracking System account; and 

(5) incorporation of an offoot plan that has boon 

approved by tho Administrator under 4 CFR Part 

Statutory Authority G.S. 143-215. 3(a)(1); 
143-215. 107(a)(8); 143-215.108. 

.0418 PERMIT REOPENINGS 

(a) As provided in Soction .0500 of this Subchapter, tho 
Dirootor shall roopon a permit for roooons spocifiod in Rulo 
.0517 of this Subchapter, including wh e n e v e r additional 
requir e m e nts b e com e applicab le to any affect e d unit gov 
omod by tho permit. 

(b) Uf>on reopening a permit for reasons spocificd in Rulo 
.0517 of this Subchapter, th e Dir e ctor shall issu e a draft 
pormit changing tho provioionD, or adding the r e quirem e nto, 
for which the rcopwning was necessary. 

(e) — As nocegaar)'. tho Director shall roopon a permit to 
inoorporato nitrog e n oxidoo roquir e m e nto, oonoiotont with 
S e ction 107 of tho federal Cl e an Air Act and rul e s impl e 
menting Section 4 07 of tho federal Clean Air Act. 

(d) j\ny reopening of a pormit shall not affoot tho term o f 
th e p e rrH ttr 



Statutory Authority G. S. 

143-215. 107(a)(8); 143-215.108. 



143-215. 3(a)(1); 



Notice is hereby given in accordance with G.S. 
150B-21.2 that the EHNR - NC Marine Fisheries 
Convnission intends to adopt temporary and permanent rules 
establishing the procedures and conditions which will be 
used to issue proclamations closing or restricting the harvest 
offish in areas of coastal waters which are the subject of 
warnings or advisories by the State Health Director con- 
cerned with dangers or risks to public health or safety from 
the consumption offish taken from those areas. During the 
next several weeks, the Marine Fisheries Commission will be 
drafting criteria in cooperation with the State Health 
Director and scientific experts for deciding when closures 
are necessary and when reopening the areas should be 
considered. The agency will subsequently publish in the 
Register the text of the rule(s) it proposes to adopt as a 
result of the public hearing and of any comments received on 
the subject matter. 

Proposed Effective Date: March 1, 1996. 

A Public Hearing will be conducted at 7:00 p.m. on 



November 21, 1995 at the Grover C. Fields Middle School, 
2000 Clarendon Blvd. , New Bern, NC. 

Reason for Proposed Action: Adoption of this Rule will 
establish a procedure for prohibiting or restricting the taking 
offish from areas where the toxic dinqflagellate Pfiesteria 
piscimorte is present and is killing fish. The effects this 
substance might have on humans is unknown. The MFC will 
be drc^iing criteria for these actions and intends to adopt a 
temporary rule at the November 30 - December 1 Marine 
Fisheries Commission Business Meeting establishing these 
procedures. 

Comment Procedures: Comments and statements, both 
written and oral, may be presented at the hearing. Written 
comments are encouraged and may be submitted to the 
Marine Fisheries Commission, P.O. Box 769, Morehead 
City, NC 28557. These written and oral comments must be 
received no later than 8:00 a.m. , December 1, 1995. Oral 
presentation lengths may be limited depending on the 
number of people that wish to speak at the public hearings. 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the EHNR - NC Marine Fisheries 
Commission intends to adopt rule cited as 15A NCAC 3J 
.0403. 

Temporary: TJiis Rule was filed as a temporary rule 
effective October 16, 1995 for a period of 180 days or until 
the permanent rule becomes effective, whichever is sooner. 

Proposed Effective Date: March 1, 1996. 

A Public Hearing will be conduaed at 7:(X) p.m. on 
November 21, 1995 at the Grover C. Fields Middle School, 
2000 Clarendon Blvd. , New Bern, NC. 

Reason for Proposed Action: Adoption of this Rule will 
close a portion of the Neuse River to the taking of all marine 
and e.stuarine resources by any method. This closure is 
necessary because of the presence of Pfiesteria piscimorte, 
a toxic dinoflagellate which has caused fish kills and the 
unknown affects it has on humans. 

Comment Procedures: Comments and statements, both 
written and oral, may be presented at the hearing. Written 
comments are encouraged and may be submitted to the 
Marine Fisheries Commission, P. O. Box 769, Morehead 
City, NC 28557. These written and oral comments must be 
received no later than 8:00 a.m. , December 1, 1995. Oral 
presentation lengths may be limited depending on the 
number of people that wish to speak at the public hearings. 

Fiscal Note: This Rule does not affea the expenditures or 
revenues of local government or state funds. 



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PROPOSED RULES 



CHAPTER 3 - MARINE nSHERIES 

SUBCHAPTER 3J - NETS, POTS, DREDGES, AND 
OTHER nSHING DEVICES 

SECTION .0400 - nSHING GEAR 

.0403 NEUSE RTVER AND ITS TRIBUTARIES 

(a) It is unlawful to possess, sell, or take fish by any 
method from the Neuse River and its tributaries upstream of 
a line from Slocum Creek to Beard Creek, until the Fisher- 
ies Director, by proclamation, opens the area or any portion 
thereof to the harvest of fish. 

(h) The Fisheries Director shall issue a proclamation 
opening the area after consultation with the State Health 
Director and scientific experts working on the dinoflapellate 
Pfiesteria piscimorte and the Marine Fisheries Commission 
Chairman. 

(c) The Fisheries Director may, after prior consent of the 
Marine Fisheries Commission, by proclamation close the 
areas or a portion thereof described in Paragraph (a) of this 
Rule, for which a subsequent health advisory is issued by 
the State Health Director. 

Statutory Authority G.S. ] 13-134; 113-182; 113-221; 
143B-289.4. 



interpretations. 

ISA NCAC 7H .2301 - .2305 - The new general permit wUl 
allow expedited approval of proposals to replace existing 
bridges and culverts across streams in the coastal zone. 
The permit will be applied to projects within certain parame- 
ters of size, wetland impacts, etc. The parameters have 
been developed from a review of past permit decisions. It is 
projected that the new general permit will be used approxi- 
mately six times per year to approve projects, proposed by 
the Dept. of Transportation. It will also apply to private 
projects. There is a need to expedite review and approval 
of routine impacts on Coastal Resources. 

Comment Procedures: All persons interested in this matter 
are invited to attend the public hearing. The Coastal 
Resources Commission will receive mailed written comments 
postmarked no later than December 1, 1995. Any person 
desiring to present lengthy comments is requested to submit 
a written statement for inclusion in the record of proceedings 
at the public hearing. Additional irformation concerning the 
hearing or the proposals may be obtained by contacting Kris 
M. Norton, Division of Coastal Management, PO Box 
27687, Raleigh, NC 27611-7687, (919) 733-2293. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government funds. 



****************** 



CHAPTER 7 - COASTAL MANAGEMENT 



Notice is hereby given in accordance with G.S. 
150B-21.2 that the EHNR - Coastal Resources Com- 
mission intends to amend rules cited as 15 A NCAC 7H 
.0208, .0305, .0308, and adopt 15A NCAC 7H .2301 - 
.2305. (The text in BOLD in 15A NCAC 7H .0208 pub- 
lished in Volume 10, Issue 3, pages 197 - 204.) 

Proposed Effective Date: March 1, 1996. 

A Public Hearing will be conducted at 4:00 p.m. on 
November 16, 1995 at the Ramada Inn. 1701 South Virginia 
Dare Trail, Kill Devil Hills, NC. 

Reason for Proposed Action: 

ISA NCAC 7H .0208 - Strict application of current CRC 
rules would prevent issuing permits for these development 
proposals. Historically , the permits have been issued in 
absence of review agency objections. The new rule will 
correct this inconsistency. 

ISA NCAC 7H .0305 & .0308 - The proposed rules are 
necessary to codify the CRC 's position on how to measure 
the first line of stable natural vegetation (FLSNV) on ocean 
beaches that have been replenished with sand. The FLSNV 
is the baseline used for setback of structures on the beaches. 
Past interpretations of the current definition have been to 
use the vegetation line that existed prior to the nourishment 
projea. A recent contested case has focussed on the need 
to have the rules amended to reflect the intent of past 



SUBCHAPTER 7H - STATE GUIDELINES 
FOR AREAS OF ENVIRONMENTAL CONCERN 

SECTION .0200 - THE ESTUARINE SYSTEM 

.0208 USE STANDARDS 

(a) General Use Standards 

(1) Uses which are not water dependent will not be 
permitted in coastal wetlands, estuarine waters, 
and public trust areas. Restaurants, residences, 
apartments, motels, hotels, trailer parks, private 
roads, factories, and parking lots are examples 
of uses that are not water dependent. Uses that 
are water dependent may include: utility ease- 
ments; docks; wharfs; boat ramps; dredging; 
bridges and bridge approaches; revetments, 
bulkheads; culverts; groins; navigational aids; 
mooring pilings; navigational channels; simple 
access channels and drainage ditches. 

(2) Before being granted a permit by the CRC or 
local permitting authority, there shall be a 
finding that the applicant has complied with the 
following standards: 

(A) The location, design, and need for develop- 
ment, as well as the construction activities 
involved must be consistent with the stated 
management objective. 
(B) Before receiving approval for location of a use 



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PROPOSED RULES 



or development within these AECs, the per- 
mit-letting authority shall find that no suitable 
alternative site or location outside of the AEC 
exists for the use or development and, further, 
that the applicant has selected a combination of 
sites and design that will have a minimum 
adverse impact upon the productivity and 
biologic integrity of coastal marshland, shell- 
fish beds, beds of submerged aquatic vegeta- 
tion, spawning and nursery areas, important 
nesting and wintering sites for waterfowl and 
wildlife, and important natural erosion barriers 
(cypress fringes, marshes, clay soils). 

(C) Development shall not violate water and air 
quality standards. 

(D) Development shall not cause major or irrevers- 
ible damage to valuable documented archaeo- 
logical or historic resources. 

(E) Development shall not measurably increase 
sillation. 

(F) Development shall not create stagnant water 
bodies. 

(G) Development shall be timed to have minimum 
adverse significant affect on life cycles of 
estuarine resources. 

(H) Development shall not impede navigation or 
create undue interference with access to, or 
use of, public trust areas or estuarine waters. 

(3) When the proposed development is in conflict 
with the general or specific use standards set 
forth in this Rule, the CRC may approve the 
development if the applicant can demonstrate 
that the activity associated with the proposed 
project will have public benefits as identified in 
the findings and goals of the Coastal Area 
Management Act, that the public benefits clearly 
outweigh the long range adverse effects of the 
project, that there is no reasonable and prudent 
alternate site available for the project, and that 
ail reasonable means and measures to mitigate 
adverse impacts of the project have been incor- 
porated into the project design and will be 
implemented at the applicant's expense. These 
measures taken to mitigate or minimize adverse 
impacts may include actions that will: 

(A) minimize or avoid adverse impacts by limiting 
the magnitude or degree of the action; 

(B) restore the affected environment; or 

(C) compensate for the adverse impacts by replac- 
ing or providing substitute resources. 

(4) Primary nursery areas are those areas in the 
estuarine system where initial post larval devel- 
opment of finfish and crustaceans takes place. 
They are usually located in the uppermost sec- 
tions of a system where populations are uni- 
formly early juvenile stages. They are officially 
designated and described by the N.C. Marine 



Fisheries Commission in 15A NCAC 3B .1405 
and by the N.C. Wildlife Resources Commission 
in 15A NCAC IOC .0110. 

(5) Outstanding Resource Waters are those estuarine 
waters and public trust areas classified by the 
N.C. Environmental Management Commission 
pursuant to Title 15A, Subchapter 2B .0216 of 
the N.C. Administrative Code as Outstanding 
Resource Waters (ORW) upon fmding that such 
waters are of exceptional state or national recre- 
ational or ecological significance. In those 
estuarine waters and public trust areas classified 
as ORW by the Environmental Management 
Commission (EMC), no permit required by the 
Coastal Area Management Act will be approved 
for any project which would be inconsistent with 
applicable use standards adopted by the CRC, 
EMC, or Marine Fisheries Commission (MFC) 
for estuarine waters, public trust areas, or 
coastal wetlands. For development activities not 
covered by specific use standards, no permit will 
be issued if the activity would, based on site 
specific information, materially degrade the 
water quality or outstanding resource values 
unless such degradation is temporary. 

(6) Beds of submerged aquatic vegetation (SAV) are 
those habitats in public trust and estuarine waters 
vegetated with one or more species of 
submergent vegetation. These vegetation beds 
occur in both subtidal and intertidal zones and 
may occur in isolated patches or cover extensive 
areas. In either case, the bed is defined by the 
presence of above-ground leaves or the be- 
low-ground rhizomes and propagules. In defin- 
ing SAVs, the CRC recognizes the Aquatic 
Weed Control Act of 1991 (G.S. 113A-220 et. 
seq.) and does not intend the SAV definition and 
its implementing rules to apply to or conflict 
with the non-development control activities 
authorized by that Act. 

(b) Specific Use Standards 
(1) Navigation channels, canals, and boat basins 
must be aligned or located so as to avoid pri- 
mary nursery areas highly productive shellfish 
beds, beds of submerged aquatic vegetation, or 
significant areas of regularly or irregularly 
flooded coastal wetlands. 

(A) Navigation channels and canals may be al- 
lowed through narrow fringes of regularly and 
irregularly flooded coastal wetlands if the loss 
of wetlands will have no significant adverse 
impacts on fishery resources, water quality or 
adjacent wetlands, and, if there is no reason- 
able alternative that would avoid the wetland 
losses. 

(B) All spoil material from new construction shall 
be confined landward of regularly and irregu- 



1553 



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November 1, 1995 



10:15 



PROPOSED RULES 



^ 



\ 



) 



larly flooded coastal wetlands and stabilized to 
prevent entry of sediments into the adjacent 
water bodies or marsh. 

(C) Spoil from maintenance of channels and canals 
through irregularly flooded wetlands shall be 
placed on non-wetland areas, remnant spoil 
piles, or disposed of by an acceptable method 
having no significant, long term wetland 
impacts. Under no circumstances shall spoil 
be placed on regularly flooded wetlands. 

(D) Widths of the canals and channels shall be the 
minimum required to meet the applicant's 
needs and provide adequate water circulation. 

(E) Boat basin design shall maximize water ex- 
change by having the widest possible op>ening 
and the shortest practical entrance canal. 
Depths of boat basins shall decrease from the 
waterward end inland. 

(F) Any canal or boat basin shall be excavated no 
deeper than the depth of the connecting chan- 
nels. 

(G) Canals for the purpose of multiple residential 
development shall have: 

(i) no septic tanks unless they meet the stan- 
dards set by the Division of Environmental 
Management and the Division of Environ- 
mental Health; 
(ii) no untreated or treated point source dis- 
charge; 
(iii) storm water routing and retention areas 
such as settling basins and grassed swales. 
(H) Construction of finger canal systems will not 
be allowed. Canals shall be either straight or 
meandering with no right angle comers. 
(I) Canals shall be designed so as not to create an 
erosion hazard to adjoining property. Design 
may include bulkheading, vegetative stabiliza- 
tion, or adequate setbacks based on soil char- 
acteristics. 
(J) Maintenance excavation in canals, channels 
and boat basins within primary nursery areas 
and beds of submerged aquatic vegetation 
should be avoided. However, when essential 
to maintain a traditional and established use, 
maintenance excavation may be approved if the 
applicant meets all of the following criteria as 
shown by clear and convincing evidence ac- 
companying the jjermit application. This Rule 
does not affect restrictions placed on permits 
issued after March 1, 1991. 
(i) The applicant demonstrates and documents 
that a water-dependent need exists for the 
excavation; and 
(ii) There exists a previously permitted chan- 
nel which was constructed or maintained 
under permits issued by the State or Fed- 
eral government. If a natural channel was 



in use, or if a human-made channel was 
constructed before permitting was neces- 
sary, there must be clear evidence that the 
channel was continuously used for a spe- 
cific purpose; and 

(iii) Excavated material can be removed and 
placed in an approved disposal area with- 
out significantly impacting adjacent nurs- 
ery areas and beds of submerged aquatic 
vegetation; and 

(iv) The original depth and width of a hu- 
man-made or natural channel will not be 
increased to allow a new or expanded use 
of the channel. 

(2) Hydraulic Dredging 

(A) The terminal end of the dredge pipeline shall 
be positioned at a distance sufficient to pre- 
clude erosion of the containment dike and a 
maximum distance from spillways to allow 
adequate settlement of suspended solids. 

(B) Dredge spoil must be either confined on high 
ground by adequate retaining structures or if 
the material is suitable, deposited on beaches 
for purposes of renourishment, with the excep- 
tion of (G) of this Subsection (b)(2). 

(C) Confinement of excavated materials shall be on 
high ground landward of regularly and irregu- 
larly flooded marshland and with adequate soil 
stabilization measures to prevent entry of 
sediments into the adjacent water bodies or 
marsh. 

(D) Effluent from diked areas receiving disposal 
from hydraulic dredging operations must be 
contained by pipe, trough, or similar device to 
a point waterward of emergent vegetation or, 
where local conditions require, below mean 
low water. 

(E) When possible, effluent from diked disposal 
areas shall be returned to the area being 
dredged. 

(F) A water control structure must be installed at 
the intake end of the effluent pipe. 

(G) Publicly funded projects will be considered by 
review agencies on a case-by-case basis with 
respect to dredging methods and spoil disposal. 

(H) Dredge spoil from closed shellfish waters and 
effluent from diked disposal areas used when 
dredging in closed shellfish waters shall be 
returned to the closed shellfish waters. 

(3) Drainage Ditches 

(A) Drainage ditches located through any marsh- 
land shall not exceed six feet wide by four feet 
deep (from ground surface) unless the appli- 
cant shows that larger ditches are necessary for 
adequate drainage. 

(B) Spoil derived from the construction or mainte- 
nance of drainage ditches through regularly 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1554 



PROPOSED RULES 



flooded marsh shall be placed landward of 
these marsh areas in a manner that will insure 
that entry of sediment into the water or marsh 
will not occur. Spoil derived from the con- 
struction or maintenance of drainage ditches 
through irregularly flooded marshes shall be 
placed on nonwetlands wherever feasible. 
Non-wetland areas include relic disposal sites. 

(C) Excavation of new ditches through high ground 
shall take place landward of a temporary 
earthen plug or other methods to minimize 
siltation to adjacent water bodies. 

(D) Drainage ditches shall not have a significant 
adverse effect on primary nursery areas, 
productive shellfish beds, beds of submerged 
aquatic vegetation, or other documented im- 
portant estuarine habitat. Particular attention 
shall be placed on the effects of freshwater 
inflows, sediment, and nutrient Introduction. 
Settling basins, water gates, retention struc- 
tures are examples of design alternatives that 
may be used to minimize sediment introduc- 
tion. 

(4) Nonagricultural Drainage 

(A) Drainage ditches shall be designed so that 
restrictions in the volume or diversions of flow 
are minimized to both surface and ground 
water. 

(B) Drainage ditches shall provide for the passage 
of migratory organisms by allowing free 
passage of water of sufficient depth. 

(C) Drainage ditches shall not create stagnant 
water pools or significant changes in the 
velocity of flow. 

(D) Drainage ditches shall not divert or restrict 
water flow to important wetlands or marine 
habitats. 

(5) Marinas. Marinas are defined as any publicly or 
privately owned dock, basin or wet boat storage 
facility constructed to accommodate more than 
10 boats and providing any of the following 
services: permanent or transient docking spaces, 
dry storage, fueling facilities, haulout facilities 
and repair service. Excluded from this defini- 
tion are boat ramp facilities allowing access 
only, temporary docking and none of the preced- 
ing services. Expansion of existing facilities 
shall also comply with these standards for all 
development other than maintenance and repair 
necessary to maintain previous service levels. 

(A) Marinas shall be sited in non-wetland areas or 
in deep waters (areas not requiring dredging) 
and shall not disturb valuable shallow water, 
submerged aquatic vegetation, and wetland 
habitats, except for dredging necessary for 
access to high-ground sites. The following 
four alternatives for siting marinas are listed in 



order of preference for the least damaging 
alterative; marina projects shall be designed to 
have the highest of these four priorities that is 
deemed feasible by the permit letting agency: 
(i) an upland basin site requiring no alteration 
of wetland or estuarine habitat and provid- 
ing adequate flushing by tidal or wind 
generated water circulation; 
(ii) an upland basin site requiring dredging for 
access when the necessary dredging and 
operation of the marina will not result In 
the significant degradation of existing 
fishery, shellfish, or wetland resources and 
the basin design shall provide adequate 
flushing by tidal or wind generated water 
circulation; 
(iii) an open water site located outside a pri- 
mary nursery area which utilizes piers or 
docks rather than channels or canals to 
reach deeper water; and 
(iv) an open water marina requiring excavation 
of no intertidal habitat, and no dredging 
greater than the depth of the connecting 
channel. 

(B) Marinas which require dredging shall not be 
located in primary nursery areas nor in areas 
which require dredging through primary nurs- 
ery areas for access. Maintenance dredging in 
primary nurseiy areas for existing marinas will 
be considered on a case-by-case basis. 

(C) To minimize coverage of public trust areas by 
docks and moored vessels, dry storage marinas 
shall be used where feasible. 

(D) Marinas to be developed In waters subject to 
public trust rights (other than those created by 
dredging upland basins or canals) for the 
purpose of providing docking for residential 
developments shall be allowed no more than 
27 sq. ft. of public trust areas for every one 
lin. ft. of shoreline adjacent to these public 
trust areas for construction of docks and moor- 
ing facilities. The 27 sq. ft. allocation shall 
not apply to fairway areas between parallel 
piers or any portion of the pier used only for 
access from land to the docking spaces. 

(E) To protect water qiulity of shellfishlng areas, 
marinas shall not be located within areas 
where shellfish harvesting for human consump- 
tion is a significant existing use or adjacent to 
such areas if shellfish harvest closure is antici- 
pated to result from the location of the marina. 
In compliance with Section 101(a)(2) of the 
Clean Water Act and North Carolina Water 
Quality Standards adopted pursuant to that 
section, shellfish harvesting is a significant 
existing use if it can be established that shell- 
fish have been regularly harvested for human 



1555 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



consumption since November 28, 1975 or that 
shellfish apparently are propagating and sur- 
viving in a biologically suitable habitat and are 
available and suitable for harvesting for the 
purpose of human consumption. The Division 
of Marine Fisheries shall be consulted regard- 
ing the significance of shellfish harvest as an 
existing use and the magnitude of the quantities 
of shellfish which have been harvested or are 
available for harvest in the area where harvest 
will be affected by the development. 

(F) Marinas shall not be located without written 
consent from the controlling parties in areas of 
submerged lands which have been leased from 
the state or deeded by the state. 

(G) Marina basins shall be designed to promote 
flushing through the following design criteria: 

(i) the basin and channel depths shall gradu- 
ally increase toward open water and shall 
never be deeper than the waters to which 
they connect; and 
(ii) when possible, an opening shall be pro- 
vided at opfKJsite ends of the basin to 
establish flow-through circulation. 

(H) Marinas shall be designed to minimize adverse 
effects on navigation and public use of public 
trust areas while allowing the applicant ade- 
quate access to deep waters. 

(I) Marinas shall be located and constructed so as 
to avoid adverse impacts on navigation 
throughout all federally maintained chaimels 
and their immediate boundaries. This includes 
mooring sites (permanent or temporary), speed 
or traffic reductions, or any other device, 
either physical or regulatory, that may cause a 
federally maintained channel to be restricted. 

(J) Open water marinas shall not be enclosed 
within breakwaters that preclude circulation 
sufficient to maintain water quality. 

(K) Marinas which require dredging shall provide 
acceptable areas to accommodate disposal 
needs for future maintenance dredging. Proof 
of the ability to truck the spoil material from 
the marina site to an acceptable disposal area 
will be acceptable. 

(L) Marina design shall comply with all applicable 
requirements for management of stormwater 
runoff. 

(M) Marinas shall post a notice prohibiting the 
discharge of any waste from boat toilets and 
explaining the availability of information on 
local pump-out services. 

(N) Boat maintenance areas must be designed so 
that all scraping, sandblasting, and painting 
will be done over dry land with adequate 
containment devices to prevent entry of waste 
materials into adjacent waters. 



(O) All marinas shall comply with all applicable 
standards for docks and piers, bulkheading, 
dredging and spoil disposal. 

(P) All applications for marinas shall be reviewed 
to determine their potential impact and compli- 
ance with applicable standards. Such review 
shall consider the cumulative impacts of ma- 
rina development. 

(Q) Replacement of existing marinas to maintain 
previous service levels shall be allowed pro- 
vided that the preceding rules are complied 
with to the maximum extent possible, with due 
consideration being given to replacement costs, 
service needs, etc. 
(6) Docks and Piers 

(A) Docks and piers shall not significantly interfere 
with water flows. 

(B) To preclude the adverse effects of shading 
coastal wetlands vegetation, docks and piers 
built over coastal wetlands shall not exceed six 
feet in width. "T"s and platforms associated 
with residential piers must be at the waterward 
end, and must not exceed a total area of 500 
sq. ft. with no more than six feet of the di- 
mension perpendicular to the marsh edge 
extending over coastal wetlands. Water de- 
pendent projects requiring piers or wharfs of 
dimensions greater than those stated in this 
Rule shall be considered on a case-by-case 
basis. 

(C) Piers shall be designed to minimize adverse 
effects on navigation and public use of waters 
while allowing the applicant adequate access to 
deep waters by: 

(i) not extending beyond the established pier 
length along the same shoreline for similar 
use; (This restriction shall not apply to 
piers 200 feet or less in length unless 
necessary to avoid unreasonable interfer- 
ence with navigation or other uses of the 
waters by the public); 

(ii) not extending into the channel portion of 
the water body; and 

(iii) not extending more than one-third the 
width of a natural water body or 
man-made canal or basin. Measurements 
to determine widths of the channels, canals 
or basins shall be made from the 
waterward edge of any coastal wetland 
vegetation which borders the water body. 
The one-third length limitation will not 
apply in areas where the U.S. Army Corps 
of Engineers, or a local government in 
consultation with the Corps of Engineers, 
has established an official pier-head line. 

(D) Pier alignments along federally maintained 
channels must meet Corps of Engineers Dis- 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1556 



PROPOSED RULES 



trict guidelines. 

(E) Piers shall not interfere with the access to any 
riparian property and shall have a minimum 
setback of 15 feet between any part of the pier 
and the adjacent property owner's areas of 
riparian access. The line of division of areas 
of riparian access shall be established by 
drawing a line along the channel or deep water 
in front of the properties, then drawing a line 
perpendicular to the line of the channel so that 
it intersects with the shore at the point the 
upland property line meets the water's edge. 
The minimum setback provided in the rule 
may be waived by the written agreement of the 
adjacent riparian owner(s) or when two adjoin- 
ing riparian owners are co-applicants. Should 
the adjacent property be sold before construc- 
tion of the pier commences, the applicant shall 
obtain a written agreement with the new owner 
waiving the minimum setback and submit it to 
the permitting agency prior to initiating any 
development of the pier. Application of this 
Rule may be aided by reference to an ap- 
proved diagram illustrating the rule as applied 
to various shoreline configurations. Copies of 
the diagram may be obtained from the Division 
of Coastal Management. When shoreline 
configuration is such that a perpendicular 
alignment cannot be achieved, the pier shall be 
aligned to meet the intent of this Rule to the 
maximum extent practicable. 

(F) Docks and piers shall not significantly interfere 
with shellfish franchises or leases. Applicants 
for authorization to construct a dock or pier 
shall provide notice of the permit application 
or exemption request to the owner of any part 
of a shellfish franchise or lease over which the 
proposed dock or pier would extend. 

(7) Bulkheads and Shore Stabilization Measures 

(A) Bulkhead alignment, for the purpose of shore- 
line stabilization, shall approximate mean high 
water or normal water level. 

(B) Bulkheads shall be constructed landward of 
significant marshland or marshgrass fringes. 

(C) Bulkhead fill material shall be obtained from 
an approved upland source, or if the bulkhead 
is a part of a permitted project involving 
excavation from a non-upland source, the 
material so obtained may be contained behind 
the bulkhead. 

(D) Bulkheads or other structures employed for 
shoreline stabilization shall be j>ennitted below 
approximate mean high water or normal water 
level only when the following standards are 
met: 

(i) the property to be bulkheaded has an 
identifiable erosion problem, whether it 



results from natural causes or adjacent 
bulkheads, or it has unusual geographic or 
geologic features, e.g. steep grade bank, 
which will cause the applicant unreason- 
able hardship under the other provisions of 
this Rule; 

(ii) the bulkhead aligimient extends no further 
below approximate mean high water or 
normal water level than necessary to allow 
recovery of the area eroded in the year 
prior to the date of application, to align 
with adjacent bulkheads, or to mitigate the 
unreasonable hardship resulting from the 
unusual geographic or geologic features; 

(iii) the bulkhead alignment will not result in 
significant adverse impacts to public trust 
rights or to the property of adjacent ripar- 
ian owners; 

(iv) the need for a bulkhead below approximate 
mean high water or normal water level is 
documented in the Field Investigation 
Report or other reports prepared by the 
Division of Coastal Management; and 

(v) the property to be bulkheaded is in a 
nonoceanfront area. 
(E) Where possible, sloping rip-rap, gabions, or 
vegetation shall be used rather than vertical 
seawalls. 
(8) Beach Nourishment 

(A) Beach creation or maintenance may be allowed 
to enhance water related recreational facilities 
for public, commercial, and private use. 

(B) Beaches may be created or maintained in areas 
where they have historically been found due to 
natural processes. They wiU not be allowed in 
areas of high erosion rates where frequent 
maintenance will be necessary. 

(C) Placing unconfined sand material in the water 
and along the shoreline will not be allowed as 
a method of shoreline erosion control. 

(D) Material placed in the water and along the 
shoreline shall be clean sand free from pollut- 
ants and highly erodible finger material. Grain 
size shall be equal to or larger than that found 
naturally at the site. 

(E) Material from dredging projects can be used 
for beach nourishment if: 

(i) it is first handled in a manner consistent 
with rules governing spoil disp>osal; 

(ii) it is allowed to dry for a suitable period; 
and 

(iii) only that material of acceptable grain size 
is removed from the disposal site for 
placement on the beach. Material shall 
not be placed directly on the beach by 
dredge or dragline during maintenance 
excavation. 



1557 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



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(F) Beach creation shall not be allowed in any 
primary nursery areas, nor in any areas where 
siltation from the site would pose a threat to 
shellfish beds. 

(G) Material shall not be placed on any coastal 
wetlands or beds of submerged aquatic vegeta- 
tion. 

(H) Material shall not be placed on any submerged 
bottom with significant shellfish resources. 

(I) Beach construction shall not create the poten- 
tial for filling adjacent or nearby navigation 
channels, canals, or boat basins. 

(J) Beach construction shall not violate water 
quality standards. 

(K) Permit renewal of these projects shall require 
an evaluation of any adverse impacts of the 
original work. 

(L) Permits issued for this development shall be 
limited to authorizing beach nourishment only 
one time during the Ufe of the permit. Permits 
may be renewed for maintenance work or 
repeated need for nourishment. 
(9) Wooden and Riprap Groins 

(A) Groins shall not extend more than 25 ft. 
waterward of the mean high water or normal 
water level unless a longer structure is justified 
by site specific conditions, sound engineering 
and design principals. 

(B) Groins shall be set back a minimum of 15 ft. 
from the adjoining property lines. This set- 
back may be waived by written agreement of 
the adjacent riparian owner(s) or when two 
adjoining riparian owners are co-applicants. 
Should the adjacent property be sold before 
construction of the groin commences, the 
apphcant shall obtain a written agreement with 
the new owner waiving the minimum setback 
and submit it to the permitting agency prior to 
initiating any development of the groin. 

(C) Groins shall pose no threat to navigation. 

(D) The height of groins shall not exceed 1 ft. 
above mean high water or the normal water 
level. 

(E) No more than two structures shall be allowed 
per 100 ft. of shoreline unless the applicant 
provides evidence that more structures are 
needed for shoreline stabilization. 

(F) "L" and "T" sections shall not be allowed at 
the end of groins. 

(G) Riprap material used for groin construction 
shall be free from loose dirt or any other 
pollutant in other than non-harmful quantities 
and of a size sufficient to prevent its move- 
ment from the site by wave and current action. 

(10) "Free Standing Moorings" 

(A) A "free standing mooring" is any means to 
attach a ship, boat, vessel, floating structure 



or other water craft to a stationary under- 
water device, mooring buoy, buoyed anchor. 
or piling (as long as the piling is not associ- 
ated with an existing or proposed pier, 
dock, or boathouse). 

(B) Free standing moorings shall be permitted 
only: 

ii) to riparian property owners within their 
riparian corridors; or 

(ii) as a publicly sponsored project provid- 
ing a suitable area for access to any 
mooring(s) and other land based opera- 
tions which shall include but not be 
limited to wastewater pump out, trash 
disposal and vehicle parking. 

(C) To protect water quality of shellfishing 
areas, mooring fields shall not be located 
yyithin areas where shellfish harvesting for 
human consumption is a significant existing 
use or adjacent to such areas if shellfish 
harvest closure is anticipated to result from 
the location of the mooring field. In compli- 
ance with Section 101(a)(2) of the Federal 
Water Pollution Control Act. 33 U.S.C. 
1251 (a)(2). and North Carolina Water 
Quality Standards adopted pursuant to that 
section, shellfish harvesting is a significant 
existing use if it can be established that 
shellfish have been regularly harvested for 
human consumption since November 28. 
1975 or that shellfish apparently are propa- 
gating and surviving in a biologically suit- 
able habitat and are available and suitable 
for harvesting for the purpose of human 
consumption. The Division of Marine Fish- 
eries shall be consulted regarding the signifi- 
cance of shellfish harvest as an existing use 
and the magnitude of the quantities of 
shellfish which have been harvested or are 
available for harvest in the area where 
harvest will be affected by the development. 

(D) Moorings shall not be located without writ- 
ten consent from the controlling parties in 
areas of submerged lands which have been 
leased from the state or deeded by the state. 

(E) Moorings shall be designed and maintained 
to minimize adverse effects on navigation 
and public use of public trust areas while 
allowing the a pplicant adequate access to 
deep waters. 

(F) Moorings shall be located and constructed 
so as to avoid adverse impacts on navigation 
throughout all federally maintained channels 
and their immediate boundaries. This 
includes mooring sites (permanent or tempo- 
rary), speed or traffic reductions, or any 
other device, either physical or regulatory. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1558 



PROPOSED RULES 



that may cause a federally maintained chan- 
nel to be restricted. 

(G) Open water moorings shall not be enclosed 
within breakwaters that preclude circulation 
sufficient to maintain water quality. 

(H) Moorings and the associated land based 
operation design shall comply with all appli- 
cable requirements for management of 
stormwater runoff. 
(D Mooring fields shall have posted in view of 
patrons a notice prohibiting the discharge of 
any waste from boat toilets or any other 
discharge and explaining the availability of 
information on local pump-out services and 
waste disposal. 

(.D All a pplications for moorings shall be re- 
viewed to determine their potential impact 
and compliance with a pplicable standards. 
Such review shall consider the cumulative 
impacts of moorings development. 

(K) Free standing moorings associated with 
public service or temporary construc- 
tion/salvage operations can be permitted 
without a public sponsor and shall be evalu- 
ated on a case-bv-case basis. 

(L) Free standing mooring buoys and piles are 
to be evaluated based upon the arc of the 
swing including the vessel to be moored. 
Moorings and the attached vessel shall not 
interfere with the access of any riparian 
owner nor shall U block riparian access by 
blocking channels, deep water, etc. which 
allows riparian access. Free standing moor- 
ings shall not interfere with the ability of 
any riparian owner to place a pier for ac- 
cess. 

(M) Free standing moorings shall be marked or 
colored in compliance with U.S. Coast 
Guard and N.C. Wildlife Resource Commis- 
sion requirements and the required marking 
maintained for the life of the mooring(s). 

(N) The type of material used to create a moor- 
ing must be free of pollutants and of a 
design and type of material so as to not 
present a hazard to navigation or public 
safety. 

(O) Existing free standing moorings (i.e. 
buoys/pilings) may be maintained in place 
for two years. However, if tlie moorings(s) 
deteriorate or are damaged such that re- 
placement is necessary during the two year 
period, the mooring(s) then must comply 
with those guidelines of the Division in place 
at that time. In any event, existing moor- 
ings must comply with these Rules within 
two years. 
(1 1) Filling of Canals. Basins and Ditches ; Not 



withstanding the general use standards for 
estuarine systems as set out in 7H ■0208(a') of 
this Rule, filling canals, basins and ditches shall 
be allowed if^ 

(A) the area to be filled was not created by exca- 
vating lands which were below the noimal 
high water or normal water level: and 

(B) if the area was created from wetlands, the 
elevation of the proposed filling does not 
exceed the elevation of said wetlands so that 
wetland function will be restored; and 

(O the filling will not adversely impact any desig- 
nated primary nursery area, shellfish bed, bed 
of submerged aquatic vegetation, coastal 
wetlands other than a narrow fringe around the 
shoreline, recognized public trust right or 
established public trust usage; and 

(D) the filling will not adversely affect the value 
and enjoyment of property of any riparian 
owner; and 

(E) the Filling will further some policy of the 
Commission such as retreating from erosion or 
avoiding water quality degradation. 

Statutory Authority G.S. 113A-107(b); 1I3A-108; 
113A-113(b); 113A-124. 

SECTION .0300 - OCEAN HAZARD 
AREAS 

.0305 GENERAL IDENTIFICATION AND 
DESCRIPTION OF LANDFORMS 

(a) Ocean Beaches. Ocean beaches are lands consisting 
of unconsolidated soil materials that extend from the mean 
low water line landward to a point where either: 

(1) the growth of vegetation occurs, or 

(2) a distinct change in slope or elevation alters the 
configuration of the landform, whichever is 
farther landward. 

(b) Primary Dunes. Primary dunes are the first mounds 
of sand located landward of the ocean beaches having an 
elevation equal to the mean flood level (in a storm having a 
one percent chance of being equaled or exceeded in any 
given year) for the area plus six feet. The primary dune 
extends landward to the lowest elevation in the depression 
behind that same mound of sand (commonly referred to as 
the dune trough). 

(c) Frontal Dunes. The frontal dune is deemed to be the 
first mound of sand located landward of the ocean beach 
having sufficient vegetation, height, continuity and configu- 
ration to offer protective value. 

(d) General Identification. For the purpose of public and 
administrative notice and convenience, each designated 
minor development jjermit-letting agency with ocean hazard 
areas may designate, subject to CRC approval, a readily 
identifiable land area within which the ocean hazard areas 
occur. This designated notice area must include all of the 



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land areas defined in Rule .0304 of this Section. Natural or 
man-made landmarks may be considered in delineating this 
area. 

(e) "Vegetation Line" means the first line of stable natural 
vegetation, which shall be used as the reference point for 
measuring oceanfront setbacks. This line represents the 
boundary between the normal dry-sand beach, which is 
subject to constant flux due to waves, tides, storms and 
wind, and the more stable upland areas. It is generally 
located at or immediately oceanward of the seaward toe of 
the frontal dune or erosion escarpment. In areas where 
there is no stable natural vegetation present, this line shall 
be established by connecting or extending the lines from the 
nearest adjacent vegetation on either side of the site and by 
extrapolating (by either on-ground observation or by aerial 
photographic interpretation) to establish the line. In areas 
within the boundaries of a beach nourishment or spoil 
deposition project which is likely to change the location of 
the vegetation line, the vegetation line means the first line 
of stable natural vegetation as it existed prior to initiation of 
the beach nourishment or spoil deposition project. A project 
will be considered likely to change the location of the 
vegetation line based on an analysis of the amount and 
quality of sand and the maimer in which the sand is placed 
on the beach. 

(f) "Erosion Escarpment" means normal vertical drop in 
the beach profile caused from high tide or storm tide 
erosion. 

(g) Measurement line means the line from which the 
ocean front setback as described in Rule .0306(a) of this 
Subchapt e r Section is measured in the unvegetated beach 
area of environmental concern as described in Rule 
.0304(a)(4) of this Subchapter. Section. Procedures for 
determining the measurement line shall be adopted by the 
Commission for each area where such a line is designated. 
These procedures shall be available from any local permit 
officer or the Division of Coastal Management. 

Statutory Authority G.S. 113A-107; 113A-1 13(b)(6); 
113A-J24. 

.0308 SPECIFIC USE STANDARDS FOR 
OCEAN HAZARD AREAS 

(a) Ocean Shoreline Erosion Control Activities: 
(1) Use Standards Applicable to all Erosion Control 
Activities: 

(A) All oceanfront erosion response activities shall 
be consistent with the general policy statements 
in 15A NCAC 7M .0200. 

(B) Permanent erosion control structures may 
cause significant adverse impacts on the value 
and enjoyment of adjacent properties or public 
access to and use of the ocean beach, and, 
therefore, are prohibited. Such structures 
include, but are not limited to: bulkheads; 
seawalls; revetments; jetties; groins and break- 
waters. 



(C) Rules concerning the use of oceanfront erosion 
response measures apply to all oceanfront 
properties without regard to the size of the 
structure on the property or the date of its 
construction. 

(D) All permitted oceanfront erosion response 
projects, other than beach bulldozing and 
temjKjrary placement of sandbag structures, 
shall demonstrate sound engineering for their 
planned purpose. 

(E) Shoreline erosion response projects shall not 
be constructed in beach or estuarine areas that 
sustain substantial habitat for important fish 
and wildUfe species unless adequate mitigation 
measures are incorporated into project design, 
as set forth in Rule .0306(1) of this Section. 

(F) Project construction shall be timed to minimize 
adverse effects on biological activity. 

(G) Prior to completing any erosion response 
project, all exposed remnants of or debris from 
failed erosion control structures must be re- 
moved by the permittee. 

(H) Erosion control structures that would otherwise 
be prohibited by these standards may be per- 
mitted on finding that: 
(i) the erosion control structure is necessary 
to protect a bridge which provides the only 
existing road access to a substantial p>opu- 
lation on a barrier island; that is vital to 
public safety; and is imminently threatened 
by erosion; 
(ii) the erosion response measures of reloca- 
tion, beach nourishment or temporary 
stabilization are not adequate to protect 
public health and safety; and 
(iii) the proposed erosion control structure will 
have no adverse impacts on adjacent prop- 
erties in private ownership and will have 
minimal impacts on public use of the 
beach. 
(I) Structures that would otherwise be prohibited 
by these standards may also be permitted on 
finding that: 
(i) the structure is necessary to protect an 
historic site of national significance, which 
is imminently threatened by shoreline 
erosion; and 
(ii) the erosion response measures of reloca- 
tion, beach nourishment or temporary 
stabilization are not adequate and practica- 
ble to protect the site; and 
(iii) the structure is limited in extent and scope 

to that necessary to protect the site; and 
(iv) any permit for a structure under this Part 
(I) may be issued only to a sponsoring 
pubUc agency for projects where the pub- 
lic benefits clearly outweigh the short or 



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1560 



PROPOSED RULES 



long range adverse impacts. Additionally, 
the jjermit must include conditions provid- 
ing for mitigation or minimization by that 
agency of any significant and unavoidable 
adverse impacts on adjoining properties 
and on public access to and use of the 
beach. 
(J) Structures that would otherwise be prohibited 
by these standards may also be permitted on 
finding that: 
(i) the structure is necessary to maintain an 
existing commercial navigation channel of 
regional significance within federally 
authorized limits; and 
(ii) dredging alone is not practicable to main- 
tain safe access to the affected channel; 
and 
(iii) the structure is limited in extent and scope 
to that necessary to maintain the channel; 
and 
(iv) the structure will not result in substantial 
adverse impacts to fisheries or other public 
trust resources; and 
(v) any permit for a structure under this Part 
(J) may be issued only to a sponsoring 
public agency for projects where the pub- 
lic benefits clearly outweigh the short or 
long range adverse impacts. Additionally, 
the fjermit must include conditions provid- 
ing for mitigation or minimization by that 
agency of any significant and unavoidable 
adverse impacts on adjoining properties 
and on public access to and use of the 
beach. 
(K) Proposed erosion response measures using 
innovative technology or design will be consid- 
ered as experimental and will be evaluated on 
a case-by-case basis to determine consistency 
with 15A NCAC 7M .0200 and general and 
specific use standards within this Section. 
(2) Temporary Erosion Control Structures: 

(A) Permittable temporary erosion control struc- 
tures shall be limited to sandbags placed above 
mean high water and parallel to the shore. 

(B) Temporary erosion control structures as de- 
fined in Part (2)(A) of this Subparagraph may 
be used only to protect imminently threatened 
structures. Normally, a structure will be 
considered to be imminently threatened if its 
foundation septic system, or right-of-way in 
the case of roads, is less than 20 feet away 
from the erosion scarp. 

(C) Temporary erosion control structures may be 
used to protect only the principal structure and 
its associated septic system, but not such 
appurtenances as gazebos, decks or any ame- 
nity that is allowed as an exception to the 



erosion setback requirement. 

(D) TemjKirary erosion control structures may be 
placed seaward of a septic system when there 
is no alternative to relocate it on the same or 
adjoining lot so that it is landward of or in line 
with the structure being protected. 

(E) Temporary erosion control structures must not 
extend more than 20 feet past the sides of the 
structure to be protected. The landward side 
of such temp>orary erosion control structures 
shall not be located more than 20 feet seaward 
of the structure to be protected or the 
right-of-way in the case of roads. 

(F) A temporary erosion control structure may 
remain in place for up to two years after the 
date of approval if it is protecting a building 
with a total floor area of 5000 sq. ft. or less, 
or, for up to five years if the building has a 
total floor area of more than 5000 sq. ft. A 
temporary erosion control structure may re- 
main in place for up to five years if it is 
protecting a bridge or a road. The property 
owner will be responsible for removal of the 
temporary structure within 30 days of the end 
of the allowable time period. A temporary 
erosion control structure may remain in place 
for up to five years regardless of the size of 
the structure if the community in which it is 
located is actively pursuing a beach nourish- 
ment project. For purposes of this Rule, a 
community is considered to be actively pursu- 
ing a beach nourishment project if it has: 

(i) been issued a CAMA permit approving 
such project, or 

(ii) been deemed worthy of further consider- 
ation by a U.S. Army Corps of Engineers' 
Beach Nourishment Reconnaissance Study, 
or 

(iii) received a favorable economic evaluation 
report on a federal project approved prior 
to 1986. 

(G) Once the temporary erosion control structure 
is determined to be unnecessary due to reloca- 
tion or removal of the threatened structure, it 
must be removed by the property owner within 
30 days. 

(H) Removal of temporary erosion control struc- 
tures may not be required if they are covered 
by dunes with vegetation sufficient to be 
considered stable and natural. 
(I) The property owner shall be resjx)nsible for 
the removal of remnants of all portions of any 
damaged temporary erosion control structure. 
(J) Sandbags used to construct temporary erosion 
control structures shall be tan in color and 
three to five feet wide and seven to 15 feet 
long when measured flat. Base width of the 



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PROPOSED RULES 



I 



i 



structure shall not exceed 20 feet, and the 
height shall not exceed six feet. 

(K) Soldier pilings and other types of devices to 
anchor sandbags shall not be allowed. 

(L) Construction of a temporary erosion control 
structure can be approved only once on any 
property regardless of ownership. 

(M) Existing sandbag structures can be maintained 
provided that the permitted dimensions are not 
exceeded. 

(N) Existing sandbag structures that have been 
properly installed prior to May 1, 1995 shall 
be allowed to remain in place according to the 
provisions of Parts (F), (G) and (H) of this 
Subparagraph with the pertinent time periods 
beginning on May 1, 1995. 

(3) Boach Nourighmont. Beach Nourishment/Spoil 
Disposal: 

(A) Sand used for beach nourishment shall be 
compatible with existing grain size and type. 
Sand to be used for beach nourishment shall be 
taken only from those areas where the result- 
ing environmental impacts will be minimal. 

CB) The vegetation line existing at the beginning of 
any large scale beach nourishment or spoil 
deposition project shall be located by PCM 
and surveyed by the project sponsor or permit- 
tee and placed on the current erosion rate 
maps. Said line shall be used for future set- 
back determinations. 

(4) Beach Bulldozing. Beach bulldozing (defined as 
the process of moving natural beach material 
from any point seaward of the first line of stable 
vegetation to create a protective sand dike or to 
obtain material for any other purpose) is devel- 
opment and may be permitted as an erosion 
response if the following conditions are met: 

(A) The area on which this activity is being per- 
formed must maintain a slope of adequate 
grade so as to not endanger the public or the 
public's use of the beach and shall follow the 
pre-emergency slope as closely as possible. 
The movement of material utilizing a bull- 
dozer, front end loader, backhoe, scraper, or 
any type of earth moving or construction 
equipment shall not exceed one foot in depth 
measured from the pre-activity surface eleva- 
tion; 

(B) The activity must not exceed the lateral bounds 
of the applicant's property unless he has per- 
mission of the adjoining land owner(s); 

(C) Movement of material from seaward of the 
low water line will require a CAMA Major 
Development and State Dredge and Fill Per- 
mit; 

(D) The activity must not significantly increase 
erosion on neighboring properties and must not 



have a significant adverse effect on important 
natural or cultural resources; 
(E) The activity may be undertaken to protect 
threatened on-site waste disposal systems as 
well as the threatened structure's foundations. 

(b) Dune Establishment and Stabilization. Activities to 
establish dunes shall be allowed so long as the following 
conditions are met: 

(1) Any new dunes established shall be aligned to 
the greatest extent possible with existing adjacent 
dune ridges and shall be of the same general 
configuration as adjacent natural dunes. 

(2) Existing primary and frontal dunes shall not, 
except for beach nourishment and emergency sit- 
uations, be broadened or extended in an 
oceanward direction. 

(3) Adding to dunes shall be accomplished in such 
a manner that the damage to existing vegetation 
is minimized. The filled areas will be immedi- 
ately replanted or temporarily stabilized until 
planting can be successfully completed. 

(4) Sand used to establish or strengthen dunes must 
be of the same general characteristics as the 
sand in the area in which it is to be placed. 

(5) No new dunes shall be created in inlet hazard 
areas. 

(6) Sand held in storage in any dune, other than the 
frontal or primary dune, may be redistributed 
within the AEC provided that it is not placed 
any farther oceanward than the crest of a pri- 
mary dune or landward toe of a frontal dune. 

(7) No disturbance of a dune area will be allowed 
when other techniques of construction can be 
utilized and alterative site locations exist to 
avoid uimecessary dune impacts. 

(c) Structural Accessways: 

(1) Structural accessways shall be permitted across 
primary dunes so long as they are designed and 
constructed in a manner which entails negligible 
alteration on the primary dune. Structural ac- 
cessways may not be considered threatened 
structures for the purpose of Paragraph (a) of 
this Rule. 

(2) An accessway shall be conclusively presumed to 
entail negligible alteration of a primary dune: 

(A) The accessway is exclusively for pedestrian 
use; 

(B) The accessway is less than six feet in width; 
and 

(C) The accessway is raised on posts or pilings of 
five feet or less depth, so that wherever possi- 
ble only the posts or pilings touch the frontal 
dune. Where this is deemed impossible, the 
structure shall touch the dune only to the 
extent absolutely necessary. In no case shall 
an accessway be permitted if it will diminish 
the dune's capacity as a protective barrier 



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November 1, 1995 



1562 



PROPOSED RULES 



against flooding and erosion; and 
(D) Any areas of vegetation that are disturbed are 
revegetated as soon as feasible. 

(3) An accessway which does not meet Part (2)(A) 
and (B) of this Paragraph shall be permitted only 
if it meets a public purpose or need which 
cannot otherwise be met and It meets Part (2)(C) 
of this Paragraph. Public fishing piers shall not 
be deemed to be prohibited by this Rule, pro- 
vided all other applicable standards are met. 

(4) In order to avoid weakening the protective 
nature of primary and frontal dunes a structural 
accessway (such as a "Hatteras ramp") shall be 
provided for any off-road vehicle (ORV) or 
emergency vehicle access. Such accessways 
shall be no greater than 10 feet in width and 
shall be constructed of wooden sections fastened 
together over the length of the affected dune 
area. 

(d) Construction Standards. New construction and 
substantial improvements (increases of 50 percent or more 
in value on square footage) to existing construction shall 
comply with the following standards: 

(1) In order to avoid unreasonable danger to life and 
prof)erty, all development shall be designed and 
placed so as to minimize damage due to fluctua- 
tions in ground elevation and wave action in a 
100 year storm. Any building constructed 
within the ocean hazard area shall comply with 
the North Carolina Building Code including the 
Coastal and Flood Plain Construction Standards, 
Chapter 34, Volume I or Section 39, Volume 
1-B and the local flood damage prevention 
ordinance as required by the National Flood 
Insurance Program. If any provision of the 
building code or a flood damage prevention 
ordinance is inconsistent with any of the follow- 
ing AEC standards, the more restrictive provi- 
sion shall control. 

(2) All structures in the ocean hazard area shall be 
on pilings not less than eight inches in diameter 
if round or eight inches to a side if square. 

(3) All pilings shall have a tip penetration greater 
than eight feet below the lowest groimd elevation 
under the structure. For those structures so 
located on the primary dune or nearer to the 
ocean, the pilings must extend to five feet below 
mean sea level. 

(4) All foundations shall be adequately designed to 
be stable during applicable fluctuations in ground 
elevation and wave forces during a 100 year 
storm. Cantilevered decks and walk'ways shall 
meet this standard or shall be designed to 
break-away without structural damage to the 
main structure. 



113A-113(b)(6)a. .b. ,d.; 113A-124. 

SECTION .2300 - GENERAL PERMIT FOR 
REPLACEMENT OF EXISTING 
BRIDGES AND CULVERTS IN 

ESTUARINE WATERS, ESTUARINE 
SHORELINES, PUBLIC TRUST 

AREAS, AND COASTAL WETLANDS 

.2301 PURPOSE 

This permit will allow the replacement of existing bridges 
and culverts in estuarine water, estuarine shoreline, public 
trust areas and coastal wetland AECs according to authority 
provided in 15A NCAC 7J . 1 100 and according to the 
following guidelines. 

Stamory Authority G.S. 113A-107; 113A-118.1; 113A-124. 

.2302 APPROVAL PROCEDURES 

(a) The applicant must contact the Division of Coastal 
Management and complete an application form requesting 
a pproval for development. 

(b) The a pplicant must provide: 

(1) information on site location, detailed project 
description, and his/her name, address and 
telephone number: 

(2) a dated scaled plat(s) showing existing and 
proposed development that follows the criteria 
outlined in 15A NCAC 7J .0203, a completed 
Form DCM-MP-5; and 

(3) confirmation that: 

(A) a written statement has been obtained and 
signed by the adjacent riparian property own- 
ers indicating that they have no objections to 
the proposed work; or 

(B) the adjacent riparian property owners have 
been notified by certified mail of the proposed 
work. Such notice shall instruct adjacent 
property owners to provide any comments on 
the proposed development in writing for con- 
sideration by permitting officials to the Divi- 
sion of Coastal Management within 10 days of 
receipt of the notice, and, indicate that no 
response will be interpreted as no objection. 
DCM staff will review all comments. If DCM 



determines that: 



m 



(ii} 



the comments are relevant to the potential 
impacts of the proposed project: and 
the permitting issues raised by the com- 
ments are worthy of more detailed review, 
the applicant will be notified that he/she 
must submit an application for a major 
development permit, 
(c) A pproval of individual projects will be acknowledged 
in writing by the Division of Coastal Management and the 
applicant shall be provided a copy of this Section. Con- 
Statutory Authority G.S. 1 13A- 107(a); 113A-107(b); struction authorized by this permit must be completed within 



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PROPOSED RULES 



one year of permit issuance or the general authorization 
expires and a new permit shall be required to begin or 
continue construction. 

(d) No work shall begin until an onsite meeting is held 
with the applicant and appropriate Division of Coastal 
Management representative. Written authorization to 
proceed with the proposed development may be issued 
during this visit if other approval procedure criteria have 
been met. 

Statutory Authority G.S. 113A-107; 113A-118.1; 113A-124. 

.2303 PERMIT FEE 

The applicant must pay a permit fee of fifty dollars 
($50.00) by check or money order payable to the Depart- 
ment. 

Stamtory Authority G.S. 113A-107; 113A-118.1; 113A-124. 

.2304 GENERAL CONDITIONS 

(a) Projects authorized by this permit will be demolition, 
removal, and replacement of existing bridges and culverts 
along the existing alignment and conforming to the standards 
herein. This permit is a pplicable only to single bridge and 
culvert projects and does not authorize temporary fill 
causeways or temporary bridges that may be associated with 
bridge replacement projects. 

£b} The permittee shall allow authorized representatives 
of the Department of Environment, Health, and Natural 
Resources (DEHNR) to make periodic inspections at any 
time deemed necessary in order to be sure that the activity 
being performed under authority of this general permit is in 
accordance with the terms and conditions prescribed herein. 

(c) This general p)ermit will not be a pplicable to proposed 
construction where DEHNR believes that authorization may 
be warranted, but that the proposed activity might signifi- 
cantly affect the quality of human environment or unneces- 
sarily endanger adjoining properties. 

(d) This general permit will not be a pplicable to proposed 
construction where DEHNR determines, after any necessary 
investigations, that the proposed activity would adversely 
affect areas which possess historic, cultural, scenic, conser- 
vation, or recreational values. 

(e) DEHNR may, on a case by case basis, determine that 
the general permit shall not be applicable to a specific 
construction proposal. In these cases, individual permit 
applications and review of the proposed project will be 
required according to 15A NCAC 7J. 

(f) This permit does not eliminate the need to obtain any 
other required state, local, or federal authorization. 

(g) Development carried out under this permit must be 
consistent with all local requirements. AEC guidelines, and 
local land use plans current at the time of authorization. 

(h) This permit does not apply to projects that require 
work channels. 

£i} Review of individual project requests will be coordi- 
nated with appropriate Division of Marine Fisheries or 



Wildlife Resources Commission personnel. This may result 
in a construction moratorium during periods of highest 
biological productivity. 

(i) Development under this permit must be carried out 
within existing Department of Transportation (DOT) right- 
of-ways or on lands under the ownership of the applicant in 
the case of a non-DQT project. 

(k) Bridge and culvert replacements shall be designed to 
minimize any adverse impacts to potential navigation or use 
of the waters by the public. 

(I) This permit shall apply only to projects involving 
repair or replacement of bridges currently serving their 
intended function. 

Statutory Authority G.S. 113A-107; U3A-118.1; U3A-124. 

.2305 SPECIFIC CONDITIONS 

(a) This general permit is applicable to bridge replace- 
ment projects spanning no more that 250 feet of estuarine 
water, public trust area, and coastal wetland AECs. 

(b) Existing roadway deck width caimot be expanded to 
create additional lanes. 

(c) Replacement of existing bridges with new bridges 
shall not reduce vertical or horizontal navigational clear- 
ances. 

(d) Bridges replacement projects shall not create vertical 
clearance more that five feet above the NWL or NHW. or 
by more than 25 percent of the existing vertical clearance, 
whichever is greater. 

(e) All demolition debris will be disposed of in approved 
highground locations. 

(f) Bridges and culverts shall be designed to allow 
passage of anticipated high water flows. 

(g) Measures sufficient to adequately restrain sedimenta- 
tion and erosion shall be implemented at each site. These 
measures should be coordinated through the North Carolina 
Division of Land Resources. 

(h) Limits of excavation and fill: Bridge or culvert 
replacement activities involving excavation or fill in 
wetlands, public trust areas, and estuarine waters shall meet 
the following conditions: 

(1) Replacing bridges with culverts shall not be 
allowed in primary nursery areas. 

(2) The total area of public trust area, estuarine 
waters, and wetlands to be excavated or filled 
shall not exceed 2.500 square feet except that 
the wetland component shall not exceed 500 
square feet. 

(3) Culverts shall not be used to replace bridges 
with open water spans greater than 50 feet. 

(4) The temporary placement or double handling of 
excavated or fill materials within waters or 
vegetated wetlands is not authorized. 

(5") No excavated or fill material will be placed at 
any time in any wetlands or surrounding waters 
outside of the alignment of the fill area indicated 
on the work plat(s'). 



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1564 



PROPOSED RULES 



(6) All excavated materials will be confined above 
mean high water or normal water level and 
landward of any wetlands behind adequate dikes 
or other retaining structures to prevent spill-over 
of solids into any wetlands or surrounding 
waters. 

(7) Placement of fill shall be restricted to the widen- 
ing of the approaches, or that which is necessary 
to install culvert(s). 

(8) No bridges with a clearance of four feet or 
greater above the NWL or NHW will be allowed 
to te replaced with culvert(s) unless the culvert 
design maintains the existing water depth, verti- 
cal clearance and horizontal clearance. 

(9) If a bridge is being replaced by a culvert(s) then 
the width of the waterbody shall not be de- 
creased by more than 40 percent. 

Statutory Authority G.S. 113A-107; 113A-118.1; 113A-124. 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the North Carolina Wildlife Resources 
Commission intends to amend rule cited as 15A NCAC lOF 
.0339. 

Proposed Effective Date: February 1 , 1996. 

A Public Hearing will be conducted at 10:00 a.m. on 
November 20, 1995 at the Archdale Building, Room 332, 
512 N. Salisbury Street. Raleigh, NC 27604. 

Reason for Proposed Action: To regulate boat speeds in 
congested areas. Pending changes are in italics. 

Comment Procedures: Interested persons may present their 
views either orally or in writing at the hearing. In addition, 
the record of hearing will be open for receipt of written 
comments from November 1, 1995 - December 1, 1995. 
Such written comments must be delivered or mailed to the 
North Carolina Wildlife Resources Commission, 512 North 
Salisbury Street, Raleigh, North Carolina 27604-1188. 

Fiscal Note: This Rule does not affect the expenditures or 
revenues of local government or state funds. 

CHAPTER 10 - WILDLIFE RESOURCES AND 
WATER SAFETY 

SUBCHAPTER lOF - MOTORBOATS ANT) 
WATER SAFETY 

SECTION .0300 - LOCAL WATER SAFETY 
REGULATIONS 

.0339 MCDOWELL COUNTY 



(a) Regulated Areas. This Rule applies to the following 
waters located on Lake James in McDowell County: 

(1) that area adjacent to the shoreline of the 
McEtowell Wildlife Club property; 

(2) that area adjacent to the shoreline of the Marion 
Moose Club property; 

(3) that area known as Morgan Cove; 

(4) that area within 50 yards of the shoreline at the 
New Manna Baptist Youth Camp; 

(5) that area within 50 yards of the shoreline at 
Burnett's Landing; 

(6) the cove area adjacent to the State Park swim- 
ming area; 

(7) the cove area adjacent to the State Park picnic 
area and dock; 

(8) that area within 50 yards of camping areas in the 
Lake James State Park as designated by the 
appropriate markers; 

(9) that area within 50 yards of the boat launching 
ramp at the Marion Lake Club. Club: 

(10) that area within 50 yards in either direction from 
the marina docks in Plantation Point Cove; 

(1 1) that designated area of Goodman's Landing 
Cove within 50 yards of the swimming area and 
boat docks of Goodman's Campground. 

(b) Speed Limit. No person shall operate any motorboat 
or vessel at greater than no-wake speed within any of the 
regulated areas described in Paragraph (a) of this Rule. 

(c) Restricted Swimming Areas. No person operating or 
responsible for the operation of any vessel, surfboard or 
waterskis shall permit the same to enter any marked swim- 
ming area located on the regulated area. 

(d) Placement and Maintenance of Markers. The Board 
of Commissioners of McDowell County is designated a 
suitable agency for placement and maintenance of the 
markers implementing this Rule. 

Statutory Authority G.S. 75A-3; 75A-15. 



TITLE 16 - DEPARTMENT OF PUBLIC 
EDUCATION 

Notice is hereby given in accordance with G.S. 
1508-21. 2 that the State Board of Education intends to 
amend rule cited as 16 NCAC 6C .0101; and adopt rule 
cited as 16 NCAC 6C .0313. 

Temporary: These Rules were filed as temporary rules 
effective October 10, 1995 for a period of 180 days or until 
the permanent rule becomes effective, whichever is sooner. 

Proposed Effective Date: April 1, 1996. 

A Public Hearing will be conducted at 9:00 a.m. on 
December 5 , 1995 at the Education Building, Room 224, 
301 N. Wilmington Street. Raleigh, NC 27601-2825. 



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PROPOSED RULES 



Reason for Proposed Action: TTiese Rules are needed to 
implement Chapter 373 of the 1995 Session Laws so that 
local school boards may adopt policies governing the use of 
criminal history checks for applicants. 

Conunent Procedures: Any interested person may present 
comments either orally at the hearing or in writing before or 
at the hearing. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of local government or state fiinds. 

CHAPTER 6 - ELEMENfTARY AND SECONDARY 
EDUCATION 

SUBCHAPTER 6C - PERSONNEL 

SECTION .0100 - GENERAL PROVISIONS 



.0101 DEFINITIONS 

As used in this Subchapter: 



m 



means and includes 






£cl 



m 



(3} 



(a) 



(b) 



(4i 
(5} 

m 



"Convicted" or "Conviction" 

the entry of: 
a plea of guilty: 

a verdict or finding of guilt by a jury, judge, 
magistrate, or other duly constituted, estab- 



lished, and recognized adjudicating body, tribu- 
nal, or official, either civilian or military; or 
a plea of no contest, nolo contendere, or the 
equivalent. 
^ "Institution of higher education" (ME) means 
a senior college or university. 
(3) "Instructional personnel" means all teachers 
as defined by G.S. 1 15C-325, with the exception 
of supervisors, and non-teaching principals, 
assistant principals, social workers, counselors and 
psychologists. The term includes principals, 
assistant principals, or counselors who teach any 
part of the day, librarians and instructional aides, 
except that: 
aides are not included for the purpose of apply- 
ing Rule .0403 of this Subchapter; and 
aides are not included for the purpose of apply- 
ing Rule .0301 of this Subchapter. 

(3) "License" has the same meaning as the term 
"certificate" as used in 16 NCAC lA .0001(2). 

(4) "National Teachers' Examination" (NTE) 
means the standard examination adopted by the 
SBE pursuant to G.S. 115C-284(c), 115C-296 and 
115C-3 15(d). 

(5) "Other personnel" means those persons not 
included within the defmition of instructional 
personnel. 

(^ "Part-time employee" means a person em- 
ployed for at least 20 hours per week. 
f7) "Permanent employee" means a person who 



(a) 
(b) 



(c) 



is not a student enrolled in the school system who 
is employed: 

(a) other than on an interim basis, to fill a position 
which is to become permanent if current needs 
and funds continue; or 

(b) for at least six months under one contract, to 
replace one or more employees who are on leave 
without pay. 

(9) (^ "Professional public school employee" means 
and includes: 
teachers; 

Administrators (superintendents, assistant or 
associate sup>erintendents, principals, assistant 
principals, and supervisors); and 
education specialists (coimselors, school social 
service workers, curriculum instructional spe- 
cialists, school psychologists, and media person- 
nel). 

(10) ^ "Renewal credit" means credit earned by a 
certificated employee for certificate renewal 
purposes. 

(11) (4^ "SACS" means the Southern Association of 
Colleges and Schools. 

(12) f44^ "Substitute" means a person who holds a 
teacher's certificate, or who is a college graduate, 
or who has been determined by a local board to be 
capable of performing the duties of a substitute 
teacher. 

(13) (43) "Teacher education program" means the 
curriculum, instructional resources and faculty that 
contribute to the quality of instruction and the 
acquisition of knowledge, skills and competencies 
required for professional personnel to perform 
effectively in the public schools. 

Authority N. C. Constitution, Article IX, Sec. 5. 

SECTION .0300 - CERTIFICATION 

.0313 CRIMINAL HISTORY CHECKS 

(a) An LEA may obtain criminal history checks on 
a pplicants for employment as provided in G.S. 115C-332 
and on applicants and current employees as provided in G.S. 
114-19.2(3). 

(b) An LEA shall not make any employment decision 
based solely upon the criminal history check provided by the 
Department of Justice whether provided pursuant to G.S. 
115C-332 or G.S. 114-19.2(a). An LEA shall obtoin from 
the repository of the record a certified copy of an appli- 
cant's or employee's conviction prior to making a final 
employment decision based on the conviction. 

(c) An LEA shall maintain data from a criminal history 
check from Department of Justice in paper format only, in 
a locked, secure place, separate from the individual's 
a pplication or personnel file. Only those officials who have 
been designated by the local board of education as having a 
need to know the results of a criminal history check may 



10:15 



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November 1, 1995 



1566 



PROPOSED RULES 



obtain access to the records. Certified copies of records of 
convictions are public records and need not be maintained 
in accordance with this Rule. 

(d) In the event the LEA discovers as a result of a 
criminal history check from Department of Justice that any 
applicant or employee who possesses a certificate or license 
issued by the SBE has a criminal history, the LEA shall 
notify in writing the SBE office of legal counsel and shall 
submit to that office a certified copy of the record of 
conviction or convictions. TTie office of legal counsel may 
initiate license or certificate revocation as appropriate. 

(e) Nothing in this Rule is intended to prohibit suspension 
with or without pay or demotion or dismissal pursuant to the 
provisions of G.S. 1 15C-325 without any requirement that 
there be actual conviction of a crime. 

Statutory Authority 1995 S.L. , c. 373, s. 3. 



TITLE 18 - SECRETARY OF STATE 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the Secretary of State intends to amend 
rules cited as 18 NCAC 4 .0102, .0201, .0203, .0205 - 
.0206. .0302 - .0308. .0311. .0316. .0401 - .0402. .0501 - 
.0504; 18 NCAC 5 .0101, .0103 - .0209, .0305; 18 NCAC 
6 .1601 - .1602, .1607; 18 NCAC 7 .0302; repeal 18 
NCAC 4 .0312 - .0314; 18 NCAC 5 .0304, .0404; 18 NCAC 
6 . 1605; and adopt 18 NCAC 4 .0317 - .0318. 

Temporary: (18 NCAC 4 .0317 - .0318 were filed as 
temporary adoptions effective November 10, 1995 for a 
period of 180 days or until the permanent rule becomes 
effective, whichever is sooner.) 

Proposed Effective Date: February 1, 1996. 

A Public Hearing will be conducted at 10:00 a.m. on 
December 4, 1995 at the Legislative Office Building, 3rd 
Floor Conference Room, 300 N. Salisbury Street, Raleigh, 
NC 27603-5909. 

Reason for Proposed Action: 

18 NCAC 4 .0102 - To add newly created statutory entities 

to responsibilities of Corporations Division. 

18 NCAC 4 .0201 - To reflea the repeal of tax on filing of 

nonprofit corporation documents. 

18 NCAC 4 .0203 - To reflect change in title of personnel. 

18 NCAC 4 .0205 - To reflect the repeal of tax on filing of 

nonprofit corporation documents. 

18 NCAC 4 .0206 - To reflea change in statute numbers 

and repeal of tax on filing of nonprofit documents. 

18 NCAC 4 .0302 - To conform rule to creation of new 

statutory business entities. 

18 NCAC 4 .0303 - To reflect change in statutory criteria 

for acceptance of nonprofit documents submitted for filing 

and change in Division accounting procedures. 



18 NCAC 4 .0304 - To conform rule to addition of new 

statutory business entity. 

18 NCAC 4 .0305 - To conform rules to new statutory 
procedures for corrective filings. 

18 NCAC 4 .0306 - To conform rules to new statutory 
requirements for nonprofit corporations and to modify rule 's 
application to encompass limited liability companies. 
18 NCAC 4 .0307 - To reflect recent revisions to statutory 
requirements on name availability. 

18 NCAC 4 .0308 - To broaden rule to encompass limited 
liability companies. 

18 NCAC 4 .0311 - To broaden rule to encompass L.L.C. 
mergers. 

18 NCAC 4 .0312 - Rule superseded by G.S. 55B-16. 
18 NCAC 4 .0313 & .0314 - Rule superseded by statutory 
procedures. 

18 NCAC 4 .0316 - To broaden rule to encompass limited 
liability companies. 

18 NCAC 4 .0317 & .0318 - Procedure in rule mandated by 
statute. 

18 NCAC 4 .0401 - To modify rule to encompass limited 
liability companies. 

18 NCAC 4 .0402 - To encompass limited liability compa- 
nies and to reflect new statutory fees. 
18 NCAC 4 .0501 - To reflect revised statutory requirements 
on name availability. 

18 NCAC 4 .0502 - To clarify terms used in rule and to 
reference new statutory procedure for qualificcuion of foreign 
professional corporations. 

18 NCAC 4 .0503 - To reflect current statutory name 
availability criteria. 

18 NCAC 4 .0504 - To reflect creation of limited liability 
companies. 

18 NCAC 5 .0101 - To correct the hours of operation of the 
U.C.C. Division. 

18 NCAC 5 .0203 - To corform the rule to revised statutory 
requirements on U.C.C. filing fees. 

18 NCAC 5 .0204 - To reflect current administrative policy 
on refunds of overpayment. 

18 NCAC 5 .0205 - To reflea amendments to time period 
allowed for filing of U.C.C. continuation statement. 
18 NCAC 5 .0206 - To eliminate repetition of contents of 
statute. 

18 NCAC 5 .0207 - To cotform the rule to revised statutory 
requirements on U.C.C. filing fees. 

18 NCAC 5 .0208 & .0209 - To reflea current administra- 
tive operating praaices. 

18 NCAC 5 .0304 - U.C.C. Division now allows the public 
to search its records. 

18 NCAC 5 .0305 - To reflect the statutory requirement of 
tender of fee as requirement of filing. 
18 NCAC 5 .0404 - To reflea current administrative policy. 
18 NCAC 6 .1601 - .1602, .1604 - .1605, .1607 - To reflea 
statutory amendments. 

18 NCAC 7 .0302 - To conform the rule to requirements of 
the new G.S. lOA-4. 



1567 



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November 1, 1995 



10:15 



PROPOSED RULES 



Comment Procedures: Interested persons may present their 
views either orally or in writing at the hearing, or mail 
comments to 300 N. Salisbury St. , Raleigh, NC 27603-5909. 
All comments must be received no later than 5 p.m. on 
December 4, 1995. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government furuis. 

CHAPTER 4 - CORPORATIONS DIVISION 

SECTION .0100 - GENERAL PROVISIONS 

.0102 ADMINISTRATION AND FUNCTIONS 

(a) The chief officer of the Division is the Director. 

(b) The Division is responsible for filing and maintaining 
documents on behalf of corporations corporations, limited 
liability companies, limited liability partnerships, and 
limited partnerships whenever filing with the Secretary of 
State is specified by statute. 

(c) The Division prepares and certifies copies of docu- 
ments on file upon request. Statutory fees are charged for 
preparation and certification. 

(d) The Division provides information in response to 
written or telephone inquiry, based on information contained 
in documents on file. There is no fee for providing infor- 
mation by telephone or letter. 

(e) The Division certifies to facts contained in documents 
on file, based on an examination of its documents and 
indices. 

Statutory Authority G.S. 55-1-22; 55-1-25; 55-1-30; 55A-1- 
22 ; 55A-1-25; 55A-I-30; 57C-1-22; 57C-1-25; 57C-I-30; 
59-84.2; 59-206. 

SECTION .0200 - PAYMENT OF 
FEES AND TAXES 

.0201 TENDER OF FEE 

Filing of any document shall be accomplished only uf>on 
tender of applicable filing fee and tax to the Division. 

Statutory Authority G.S. 55-1-22; 55-1-30; 55A-1-22; 55A-1- 
30; 57C-1-22; 57C-1-30; 59-1106. 



If the Director determines that an overpayment of tax or 
fees by check or money order is so large that it is not in the 
interest of the state to issue a refund, he shall require tender 
of the exact amount of tax or fees prior to filing, prepara- 
tion of copies, or certification. 

Statutory Authority G.S. 55-1-30; 55A-1-30; 57C-1-30 . 

.0206 DOCUMENTS NOT SPECIFICALLY 
PROVIDED FOR 

When any document is filed for any corpxjration organized 
under a statute other than one found in Chapter 55 or 55A, 
and no fee is specifically provided in the applicable statute, 
the fee or tax for such filing shall be the fee or tax provided 
in G.s! 55-1-22 55 1 22; G.S. 55A 77; or G.S. 55A 7 8 
55A-1-22 : for a comparable type of document, and if no 
comparable type of document exists, the fee shall be the fee 
provided in G.S. 55-l-22(a)(26) or G.S. 55 A 77(a)(17); 
55A-l-22(27'). 

Statutory Authority G.S. 55-1-22; 55A-1-22. 

SECTION .0300 - FUSING OF DOCUMENTS 

.0302 EXECUTION 

When execution is required by any jjerson acting in the 
capacity of officer, director, incorporator, member, man- 
ager, or registered agent, execution by a holder of a power 
of attorney, by a personal representative, or by a legal 
guardian of the person shall be rejected. 

Statutory Authority G.S. 55-1-20; 55-1-30; 55A-1-20; 55A-1- 
30; 57C-1-20; 57C-1-30. 

.0303 REJECTION 

If the Director finds that a document submitted for filing 
pursuant to a provision of Chapter 55A or Chapter 59 does 
not conform to law in any respect, he shall by return mail 
or other appropriate method remit the document and f ee 
submitted to the person who submitted such document, 
accompanied by an explanation, in adequate detail, of the 
deficiency and credit the fee to that person's account . The 
date of filing of such document shall be the date upon which 
the document is filed by the Division in such form as shall 
conform to law. 



.0203 INVOICES 

Upon request for documents on file or certificates of 
information not accompanied by the applicable fee, the 
Division shall prepare and remit the material requested, 
accompanied by an invoice for the applicable fee, unless it 
is determined by the Corporations Attorney Director that it 
is in the interest of the state to require prepayment. 

Statutory Authority G.S. 55-1-30; 55A-1-30; 57C-1-30. 

.0205 OVERPAYMENT 



Statutory Authority G.S. 59-206. 

.0304 IDENTIFICATION OF CORPORATION 
/LLC AND TYPE OF DOCUMENT 

(a) Each document shall consistently identify the corpora- 
tion or limited liability company executing such document, 
if executed by a corporation or limited liability company . 
The oorpomte entity's name shall be recited throughout the 
document in the identical form, as to sp>elling, spacing, and 
punctuation, as the name appears in the existing charter of 
the corporation entity . 



10:15 



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1568 



PROPOSED RULES 



(b) If captioned, a document shall contain in its caption 
words identical to the words which appear in the applicable 
statute to identify the type of document. 

(c) Articles of incorporation for a business corpuDration 
shall identify the corporation as a "business corporation" or 
make reference to G.S. Chapter 55. Articles of incorpora- 
tion for a nonprofit corpxaration shall identify the corporation 
as a "nonprofit corporation" or make reference to G.S. 
Chapter 55A. Articles of incorporation for a professional 
corporation shall identify the corporation as a "professional 
corporation" or make reference to G.S. Chapter 55B. 

Statutory Authority G.S. 55-1-30; 55A-1-30; 55B-3; 55B-4; 
57C-1-30. 



.0305 CORRECTIVE HLINGS 
PARTNERSHIPS 



LIMITED 



(q) ;\ny e rror in th e nam e of the regist e r e d ag e nt or th e 
location of tho regiotered offioo whioh app e ars in any 
documont which has boon filed by or on bohalf of a non 
profit corfK)ration may bo corroctod by filing statomont of 
chang e of r e gist e r e d offic e or r e gist e r e d ag e nt. 

(b) Subj e ct to Paragraph (a) of this Rule, any e rror in th e 
art i cles of incorporation of a nonprofit corporation which 
have boon filed shall bo corroctod only by filing articles of 
amendm e nt. 

(o) Subj e ct to Paragraph (a) of this Rul e , any e rror in a 
rostatod chartor of a nonprofit corporation which has boon .0307 



filed shall bo corroctod only by filing a restated charter. 

(49 — Subj e ct to Paragraph (a) of this Rul e , any e rror in 
artioloo of morg e r or ooncolidation of nonprofit corporations 
which havo boon filed shall be corroctod only by filing 
articles of amendment oxocuted only by tho surviving or 
now corporation. 

(o) Subject to Paragraph (a) of this Rul e , any e rror in an 
application for a c e rtifioato of authorify which ha s boon filed 
by or on bohalf of a foreign nonprofit corporation shall bo 
corr e ct e d only by filing an application for an am e nd e d 
c e rtificat e of authority. 

(^ An error in a certificate of limited partnership which 
has been filed by or on behalf of a domestic limited partner- 
ship or in an application for registration which has been 
filed by a foreign limited partnership shall be corrected only 
by the filing of an amended certificate of limited partnership 
or an amended application for registration. 

fg:) — In any cas e in whioh thoro io an e rror in any doou 
ment whioh has boon fil e d by or on bohalf of a North 
Carolina nonprofit corporation and for which the manner of 
correction is not specified in Paragraphs (a) through (o) of 
this Rule, th e only methodo of correcting such e rror shall b e 
e ith e r: 

W filing a documont pursuxmt to the same statut e 

pursuant to which tho filing containing tho error 
was made, or 
(3) filing articl e o of am e ndm e nt. 

fh^ — No document filed to correct an error shall make 
roforonco to tho error or to "correction" or "corrected" in its 



caption, but ouch error mny bo rooitod olsowhoro in the 
docum e nt. 

Statutory Authority G.S. 59-202; 59-905. 

.0306 INCORPORATION BY REFERENCE 

(a) TTi e addreoo of e ach director and incorporator and tho 
address of tho registered offico in articles of incorpwration 
shall contain a street address if tho address lists a oify with 
a population of 5,000 or mor e poroono aooording to the 
latest U.S. C e nsuo. In any instanc e wh e r e s treet addreoo ia 
required, namo of building, rural routo number, or name of 
road or street shall bo accepted in lieu of stroot oddroas, but 
post offico box number alon e shall not bo accept e d. 

(fe) Articles of incorporation whioh oontain bylaws or 
articles of organi2ation in which bylaws or an operating 
agreement are incorporated by reference shall be rejected. 
Reference may be made in articles of incorporation 
or articles of organization to bylaw provisions or provisions 
in an operating agreement so long as such provisions are not 
thereby incorporated in the charter. 

(o) Art i ol e o of inoorp>oration fil e d pursuant to G.S. 55 A 7 
s hall list namoo and addroosoo of a minimum of three initia l 
director s . 



Statutory Authority G.S. 55-2-02; 55A-2-02; 57C-2-21. 



APPLICATION FOR RESERVATION 
OF NAME 

(a) If an applicant requests reservation of more than one 
corporat e name for a corporation, a limited liability com- 
pany, or a limited partnership , a separate application shall 
be submitted for each name. 

(b) The date of filing shall be the first day in determining 
the date of expiration of reservation. The reservation shall 
expire immediately after the termination of filings by the 
Division on the final day of the reservation period. If the 
final day of the reservation period is not an operating day of 
the Division, the reservation shall nevertheless expire on 
such final day. 

(c) A person who wishes to reserve a particular corporate 
limited partnership name after having reserved that name on 
a previous occasion may apply to reserve such name again 
after the elapse of one full business day following the 
expiration of the previous reservation. 

Statutory Authority G.S. 55-4-02; 55A-4-02; 57C-2-31; 59- 
104. 

.0308 REGISTERED OFFICE AND 
REGISTERED AGENT 

(a) In the event that a corporation has never designated a 
registered office or registered agent, or in the event that the 
a corporation's or limited liability company's registered 
agent has resigned, the corporation entity may designate a 
registered agent and/or registered office. 



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10:15 



PROPOSED RULES 



(h) — Tho foo for Filing a designation shall bo tho foo 
opooifiod in G.S. 55 1 23(a)(9) or G.S. 55A 77(a)(17), oo 
applioabl e . 

fb) (e) The information required for the designation of a 
registered agent or a registered office shall be set forth in a 
statement which shall be substantially the same as that 
provided for in G.S. 55 5 02. G.S. 55 15 8 , G.S. 55A 12, 
or G.S. 55A 65, the change of a registered agent or regis- 
tered office, except that it shall be unnecessary to set forth 
information concerning the current registered agent or 
current registered office. 

(c) (d) With respect to documents permitted to be filed 
with the Office of the Secretary of State, a person shall 
consistently use the same name and same business office 
address in each instance in which that person serves as 
registered agent for any corporation or limited liability 
company . 

(d) (^ A person who serves as registered agent for more 
than one corporation or limited liability company may notify 
the Secretary of State of the change of the address of the 
registered offices of such corporations entities by attaching 
a list of the names of those oorporations entities to the 
statement required to be filed by G.S. 55 5 02 or G.S. 
55 15 8 55-5-02, G.S. 55-15-08. G.S. 55A-5-02, G.S. 
55A-15-08. G.S. 57C-2-41. or G^ 57C-7-08 . 

Statutory Authority G.S. 55-1-22; 55-1-30; 55-5-01; 
55-5-02; 55-15-07; 55-15-08; 55A-1-22; 55A-1-30; 55A-5- 
01; 55A-5-02; 55A-15-07; 55A-15-08; 57C-1-22; 57C-1-30; 
57C-2-40; 57C-2-41; 57C-7-07; 57C-7-08. 

.0311 ART OF MERGER/SHARE EXCH 
INVOLVING FOREIGN ENTITY 

(a) Each foreign corporation entity which is a party to a 
merger or a share exchange pursuant to G.S. 55-11-07, 
G.S. 55-11-09, G.S. 55A-11-06. or G.S. 55A 4 2.1 55A-11- 
08. or 57C-9-06 shall be identified in the articles of merger 
or share exchange by state or country of incorjxsration or 
organization. Articles of merger filed pursuant to G.S. 
55 11 07 or G.S. 55A 4 2.1 these statutes shall contain: 

(1) a statement that the merger is permitted by the 
law of the state or country of incorporation or 
organization of each foreign corporation entity 
which is a party, and 

(2) a statement that each foreign corporation entity 
which is a party has complied or shall comply 
with the applicable laws of its state or country of 
incorporation or organization regarding such 
merger. 

(b) Filing purouont to G.S. 55 1 1 07 or G.S. 55 A 42.1 
shall hav e th e same eff e ct ao filing pursuant to G.S. 
55 15 20 or G.S. 55 A 72 for any foreign corporation which 
has authority to transact businoas in this state, which is a 
party to suoh merger, — and which is not th e surviving 
corporation. 



Statutory Authority G.S. 55-11-07; 55-11-09; 55A-11-06; 
55A-11-08; 57C-9-06. 

.0312 APPL FOR CERT OF AUTHORITY BY 
FOREIGN PROF CORPORATION 

If a — for e ign — corporation — which — r e nders — professional 
s e rvioeo as d e fin e d in G.S. 55B 2(6) applies for a oort i fioato 
of authority, each copy of such application shall bo aooom 
ponied by a cortiricato of tho applicable North Carolina 
lic e nsing board, making th e flam e c e rtification as is required 
for articles of incorporation pursuant to G.S. 55B 4(4). 
This requirement shall not apply to any corporation which 
was organized prior to Juno 5, 1969, and " i^ 'as fwrmittod by 
th e l aw of its juriodiotion of incorporation to rend e r such 
sen i 'io e s prior to Jun e 5, 1 9 69. 

Statutory Authority G.S. 55-15-03; 55B-2; 55B-4; 55B-15. 



.0313 FILING MERGER INVOLVING 
FOREIGN CORPORATION 

(a) — If one or more parties to a morgor Filed pursuant to 
G.S. 55A 70 is a domestic corporation, th e Filing of artiol e o 
of merg e r pursuant to G.S. 55A 41 and G.S. 55 A 42.1 shall 
toko place prior to or simultaneously with tho filing of 
articloe of morgor pursuant to G.S. 55 A 70. 

(b) — Th e Filing of artioleo of m e rg e r pursuant to G.S. 
55A 70 or G.S. 55A 41 shall be deemed a substitut e for and 
shall have tho same ofFoct as tho Filing of an application for 
withdrawal pursuxuit to G.S. 55 A 72 by any foreign oorpo 
ration which has authority' to transact buoin e os in this state, 
which is a party to ouch m e rg e r, and which is not th e 
sup i 'iving corporation. 

fe) — If a foroign corporation has been authorized to 
transact business in this etat e and is a non ouP i 'iving part)' to 
a statutory m e rg e r, th e filing of th e articles of merg e r by th e 
sur i 'iving corporation shall be accepted by tho Division as 
tho oquivalont of a Filing of an application for withdrawal, 
even if th e surviving corporation has not boon authoriz e d to 
transact business in this stat e . 



Statutory Authority G.S. 55A-41; 55A-42.1; 55A-70; 55A-72; 
55A-81. 

.0314 FILING EVIDENCE OF DISSOLUTION 
OF FOREIGN NONPROFIT CORP 

Th e filing of a copy of any Fmal docum e nt of diooolution 
b e aring an original oortifioat i on of th e appropriate ofFioial of 
tho state or country of incorporation shall bo doomed a 
substitute for and shall have tho samo offoct as tho filing of 
an application for withdrawal pursuant to G.S. 55A 72. 

Statutory Authority G.S. 55A-72; 55A-81. 

.0316 FORM FOR ANNUAL REPORT 

A corporation filing its annual report in order to comply 
with G.S. 55-16-22 or a limited liability company Filing an 
annual report pursuant to G.S. 57C-2-23 must use the 



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annual report form promulgated by the Secretary of State. 
Exact copies of the annual report form provided by the 
Corporations Division may be made and used to satisfy the 
annual filing requirement. However, annual reports with 
formats different from the form prescribed by the Corpora- 
tions Division will not be accepted for filing. 

Statutory Authority G.S. 55-1-21; 57C-1-30. 

.0317 AUTHORIZATION OF CORRECTIONS 
ON DOCUMENTS 

A document that is submitted to the Corporations Division 
for filing but rejected because it does not satisfy the require- 
ments of Chapter 55. 55A, 57C. or 59 may be corrected by 
the examiner in charge of examining the document provided 
that the examiner is authorized by the person submitting the 
document to make the correction. Upon receiving such 
authorization, the examiner shall obtain and record by 
memorandum the following information: 

(1) the name of the entity to which the document 
relates; 

(2) the type of document: 

(3) the name of the person authorizing the correction; 

(4) the name of the person or entity represented by 
the person authorizing the correction; 

(5) the instructions received by the examiner making 
the correction; 

(6) the time, date, and manner of the authorization, 
including a telephone number by which the person 
authorizing the correction may be reached; and 

(7) the name of the examiner making the correction. 
The memorandum of authorization shall be retained by the 
Division with the original of the document so corrected. 
Upon request, a copy of the memorandum of authorization 
shall be furnished to any person desiring one. 

Statutory Authumty G.S. 55-1-25; 55A-1-25; 57C-1-25; 59- 
206. 

.0318 AUTHORIZATION OF FOREIGN 
PROFESSIONAL CORPORATIONS 

A foreign professional corporation (as defined in G.S. 
55B-16(b)) shall submit with its application for a certificate 
of authority to transact business in this State a written 
certification by each licensing board authorized to regulate 
each professional service proposed to be provided in this 
State by the applicant corporation to the effect that such 
licensing board has determined that the corporation meets 
the definitional requirement of a "foreign professional 
corporation" as set forth in G.S. 55B-16rb). Such certifica- 
tion shall be made during the six months preceding the date 
of submission of the application for certificate of authority 
to which it relates. 

Statutory Authority G.S. 55-1-30; 55B-3; 55B-16. 

SECTION .0400 - CERTinCATION 



.0401 DOCUMENTS 

(a) Copies of documents filed with respect to a nonprofit 
corporation limited liability company may be certified as 
chortor documonto its articles of organization only if such 
copies begin chronologically with artioloa of incorporation 
or oth e r document of incorporation, the articles of organi- 
zation, the latest restated ohnrtor articles of organization, or 
the latest articles of amendment or articles of merger 
purporting to rewrite the charter articles of organization in 
its their entity. If requested, the copies to be certified as 
chart e r docum e nts the limited liability company's articles of 
organization shall include only such beginning document, all 
subsequent articles of amendment, and all subsequent 
articles of merger. If not otherwise requested, copies to be 
certified as chart e r dooum e nts the articles of organization 
shall begin chronologically with the latest footntod — e* 
rowritton charter restatement and shall include all subsequent 
documents on file. 

(b) Copies of documents filed with respect to corporations 
subject to the provisions of Chapter 55 or Chapter 55A may 
be certified as the articles of incorporation of such corpora- 
tion only if such copies begin chronologically with the 
articles of incorporation or other documents of incorpora- 
tion, the latest restated articles of incorporation, or the latest 
articles of amendment or articles of merger purporting to 
rewrite the corporation's articles of incorporation in their 
entirety. If requested, the documents requested to be so 
certified shall include only such begiiming document, all 
subsequent articles of amendment, and all subsequent 
articles of merger. If not otherwise requested, such docu- 
ments to be certified shall begin chronologically with the 
latest restated or rewritten articles of incorporation and shall 
include all related documents subsequently filed. 

(c) When certification of a certificate of limited partner- 
ship of a domestic limited partnership or a certificate of 
authority of a foreign limited partnership is requested, such 
certification shall include the original certificate of limited 
partnership or certificate of authority and all amendments or 
changes thereto. 

Statutory Authority G.S. 55-1-30; 55-1-40(1); 55-10-07(e); 
55A-1-30; 55A-1-40(1); 55A-10-06(f); 57C-1-03(1); 57C-1- 
30; 59-206. 

.0402 CERTIFICATION OF FACTS/ 

CERTIFICATE OF EXISTENCE/ 
AUTHORIZATION 

{«) No certification of facts, certificate of existence, or 
certificate of authorization shall contain information relating 
to more than one corporation or limited liability company 
unless such information pertains to a merger to which such 
corporations or limited liability companies were parties. 

(b) The foo for each cortificato of oxistonco or cortificate 
of authorization for oorpomtions subj e ct to th e provisiono of 
Chapter 55 shall b e th e f ee op e oifi e d in G.S. 55 1 22. — Per 
corporations subject to tho provisions of Chaptor 55A, th e 
foo for each oortification of facts shall bo tho foo spocifiod 



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in G.S. 55A 77(a)(15) for affixing oortiFicato and sod. — Fef 
limitod partn e rshipo, th e f ee for eaoh oortiFiod docum e nt 
Bhall b e th e foo spooified in G.S. 59 1106(7). 

Statutory Authority G.S. 55-1-28; 55A-1-28; 57C-1-28. 

SECTION .0500 - CORPORATE NAME 

.0501 GENERAL 

(a) The Secretary of State expressly reserves the right 
pursuant to G.S. 55-4-01, G.S. 55A 10 G.S. 55A-4-01 , 
G.S. 55-15-06, G.S. 55A 60, G.S. 55A-15-06. G.S. 57C-2- 
30, G.S. 57C-7-06, G.S. 59-103, or any other applicable 
statute, to reject filing of any document conferring a 
corporat e corporate, limited liability company, or limited 
partnership name, if he determines that such corporate name 
is contrary to law. 

(b) With roopoot to oorporationo subjoot to th e provisions 
of Chapter 55A, tho Secr e tary of State shall aooopt oono e nt 
of a corporation with a nanx ) similar to the name proposed 
to bo used by another Gorp>oration ao only one factor in 
determining wh e ther ouoh propoaod nam e is contrary to law, 
and shall mak e his determination based upon all the oiroum 
stances as they appear, when tho proposed name is submit 
tod, in acoordoDoo with tho applicable statutoe. — Tho Socro 
tary of State, upon r e c e ipt of such a oono e nt, may allow th e 
us e of such a propos e d nam e , but shall not p e rmit the use of 
a namo which is tho same as a name which is rooor\'od or 
rogistorod or which has boon approved for use at that time. 
Should th e us e of a name which is id e ntical to on e which i s 
reoer^' e d or register e d or which has boon approv e d for us e 
bo grontod by orror, the Secretary of State s hall charge no 
tax or foo for filing articles of amendment to corroct such 
e rror. 

("b) (e)When a corporation applies to the Secretary of 
State for authorization to use a name which is not distin- 
guishable upon his records from names doocribod in G.S. 
55 1 01(b) or G.S. 55 15 06(b) a name used, reserved, or 
registered by another entity , and provides the consent of 
another corporation the other entity to such use, the under- 
taking required of the consenting corporation by G.S. 
55 4 01(c)(1) or by G.S. 55 - 15 - 06(c)(1) entity shall consist 
of the consenting corporation's entity's amendment to the 
appropriate document filed with the division effecting a 
change of that corporation's entity's name to a name 
distinguishable on the records of the Secretary of State from 
the name sought to be used by the applying corporation. 
entity. 

Statutory Authority G.S 55-4-01; 55-15-06; 55A-4-01; 55 A- 
15-06; 57C-2-36; 57C-7-06; 59-103. 

.0502 WORDS PROfflBITED ESf ADDITION 
TO STATUTORY PROHIBITIONS 

(a) The words "engineer" or "engineering" or their 
derivatives shall not be included in the corporate name for 
a corporation unless it is organized pursuant to G.S. Chapter 



55B or, if it is a foreign corporation, unless it complies with 
Rul e .0312(0) of this Chapter G.S. 55B-16. provided that 
the words specified shall not be prohibited in any case 
where such words are modified by another word or words 
in such manner as to indicate activity other than the practice 
of engineering as defined in G.S. 89C-3(b). 

(b) The words "surveyor", "survey", "surveying", or 
their derivatives shall not be included in the corpwrate name 
for a corporation unless it is organized pursuant to G.S. 
Chapter 55B or, if it is a foreign corporation, unless it 
complies with .0312(o) of this Chapt e r G.S. 55B-16 . 
provided that the words specified shall not be prohibited in 
any case where such words are modified by another word or 
words in such manner as to indicate activity other than tend 
HUP i ' e ying the practice of land surveying by registered land 
surveyors as defined in G.S. 89C-3(7). 

(c) The words "architecture", "architectural", "architect", 
or their derivatives shall not be included in the corporate 
name for a corpwaration unless it is organized pursuant to 
G.S. Chapter 55B or, if it is a foreign corpwration, unless 
it complies with .0312(c) of this Chapter G.S. 55B-16 . 
provided that the words specified shall not be prohibited in 
any case where such words are modified by another word or 
words in such manner as to indicate activity other than 
dooign of otructuroo the practice of architecture as defined in 
G.S. 83A-1(7) or landscape architecture as defined in G.S. 
89 A- 1(c). 

(d) The word "co-op" shall not be included in the a 
corporate name of a oorpwration unless it is orgoniziod of 
dom e sticat e d pursmmt to in which the use of the word 
"cooperative*^ is prohibited by G.S. 54-139. 

(e) When a document is submitted conferring a corporate 
name containing the word "wholesale, " unless the purpose 
clause of the document indicates clearly that the corp)oration 
shall not engage in retail sales, the Corporations Attorney 
shall not file the articles unless he fmds, pursuant to written 
assurance by the principals or their attorney, that the 
corporation shall comply with G.S. 75-29. 

(f) The corporate name for a business corporation shall 
not contain the word "Realtor." 

(g) The corporate name for a business corporation shall 
not contain the word "insurance" followed directly by a 
corporate ending or the word "insurance" followed directly 
by a geographical designation and a corporate ending. 

Statutory Authority G.S. 54-139; 55-4-01; 55A-4-01. 

.0503 DECEPTIVELY SIMILAR AND 
DISTINGUISHABLE NAMES 
(a) A namo proposed to bo uood by a corporation subject 
to th e provisions of Chapt e r 55A shall not b e p e rmitted 
whore it begina v ^ ith tv i 'o or more words which aro the same 
as an existing corporate name where the only substantial 
diff e r e nc e b e tv ^ ' ee n th e two nam e s is th e addition or d e l e tion 
of anoth e r word such ao "oon i 'iooo", "oal e o", "aooooiatoo", 
"industries", "ontorprisos", or any other word which doos 



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PROPOSED RULES 



not indicQto tho typo of businoss to bo purouod by the 
oorporation. 

(b) A namo propoood to bo UGod by a oorporation oubjeot 
to tho provi s ions of Chapter 55A shall not bo pormi tted 
whoro tho only substantial difforonco botv ^ 'oon it and on 
e xi s ting oorporato nam e io tho addition or del e tion of a 
g e ogrophioal designation, unlose Buoh geographical dooigna 
tion added is the namo of a cit>' or count)' othor than tho oit)' 
or county of tho thon rogistorod office of tho oxist i ng 
oorporation. or the geographical dea i gnation deleted io th e 
name of a oit)' or count)' oth e r than tho oit)' or count)' of the 
rogistorod office of tho proposed corporation. — This provi 
sion is subject to G.S. 55A 60. 

(a) (o)Word6 indicating oorporatonooo Designations of 
entities , such as "company", "cc", "limited", "ltd.", 
"corporation", "corp.", "incorporated", "inc.", "profes- 
sional association", and "p. a." "p. a.", "limited liability 
company". "L.L.C.". "professional limited liability com- 
pany", and "limited partnership" shall be disregarded in 
determining if a proposed corporate entity name is distin- 
guishable upon the records of the Secretary of State (in the 
cas e of a corporation subject to th e provieiono of Chapt e r 
55) or permiooiblo (in the cas e of a oorporation subj e ct to 
Chapter 55A) , provided that such words appear at the end 
of the proposed corporate entity name. Such words shall 
not be disregarded in such determination when they appear 
in the body, rather than at the ending, of the proposed 
corporate entity name. 

(b) fd)Articles, conjunctions, prepositions, singular or 
plural fonns of a particular word, punctuation, spaces, and 
the substitution of an Arabic numeral for a word shall be 
disregarded in determining whether a proposed coqwrato 
entity name is distinguishable upon the records of the 
Secretary of State or otherwise permissible for use in a 
proposed corporat e entity name. 

Statutory Authority G.S. 55-4-01; 55A-4-01; 57C-2-30; 59- 
103. 

.0504 FILING HCTITIOUS OR ASSUMED 
NAME FOR FOREIGN ENTITY 

(a) A foreign corporation, limited liability company, or 
limited partnership whose corporat e name contains a word 
which is prohibited by statute or by Rule .0502 of this 
Chapter shall agree to use an assumed or fictitious name as 
provid e d in G.S. 55 15 06 or G.S. 55A 60 as a condition of 
the issuance of a certificate of authority to transact business 
in this State. 

(b) A foreign corporation entity which has been granted 
authority to transact business in this state, and which desires 
to add to or delete from an a ss um e d a fictitious name or to 
adopt a fictitious name in order to avoid or remove a 
conflict over the use of a name, or which desires to change 
its assumed or fictitious name, shall file pursuant to G.S. 
55 15 01 or G.S. 55A 71. an application for an amended 
certificate of authority. 



(c) No axwumod or fictitious name shall be filed with the 
Division unless required by statute or administrative rule. 

Statutory Authority G.S. 55-15-03; 55-15-04; 55-15-06; 55 A- 
15-03; 55A-15-04; 55A-15-06; 57C-7-04; 57C-7-05; 57C-7- 
06; 59-103; 59-904; 59-905. 

CHAPTER 5 - UNIFORM COMMERCIAL 
CODE DIVISION 

SECTION .0100 - GENERAL PROVISIONS 

.0101 LOCATION AND HOURS 

The Uniform Conunercial Code Division of the Depart- 
ment of the Secretary of State is located in Room 302, 
Legislative Office Building, 300 North Salisbury Street, 
Raleigh, North Carolina 27611 27603-5909 . The hours of 
the division are 7:30 a.m. to 4450 5:00 p.m. Monday 
through Friday. Filing of Uniform Commercial Code 
documents may be made from 7:30 a.m. until 3:00 3:30 
p.m. No filings will bo made after 3:00 p.m. 

Statutory Authority G.S. 25-9-401. 

SECTION .0200 - FILING PROCEDURE 

.0203 FORMS 

(a) Standard Forms. The following forms have been 
approved by the Secretary of State for use as standard 
fonns: 

(1) Form UCC-1 Uniform Commercial Code Fi- 
nancing Statement, 

(2) Form UCC-2 Uniform Commercial Code Fi- 
nancing Statement (for extra copies), 

(3) Form UCC-3 Uniform Commercial Code Fi- 
nancing Statement Change, 

(4) Form UCC-4 Uniform Commercial Code Fi- 
nancing Statement Change (for extra copies), 

(5) Form UCC-5 Uniform Commercial Code Addi- 
tional Sheets, 

(6) Form UCC-1 1 Uniform Commercial Code 
Request for Information. 

Forms UCC-1, 3 and 5 are five part snap-out forms. The 
snap-out size of the forms is five inches deep by eight 
inches wide. One timo snap out carbons are intorloavod so 
ao to print on th e oooond and suooooding parts. Forms 
UCC-2 and 4 are identical to the UCC-1 and 3 in size afid 
carbon roquiromonts but contain only four parts. Form 
UCC-1 1 is a three part snap-out form. The snap-out size of 
the form is five inches deep by eight inches wide. On e tim e 
snap out carbons ar e interl e av e d oo ao to print on th e s e cond 
and third parts. 

(b) Non Standard Forms. — Forms submitted which do not 
conform to th e standard adopted by tho Socrotar)' of Stat e 
will be considered non stxmdard documents. — Th e s e doou 
mcnts will require special handling and a fee fwnalty will bo 
imposed. This includes approved forms which are accompa 



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PROPOSED RULES 



niod by non approvod attachmonta. If an approved form ia 
roooivod with pag e o 1 , 3 or 3 miBoing it will bo oonoider e d 



the original financing atatomont to which it portaina by file 
numbor. It muot contain th e following otatomont: — "Th e 



g non otandnrd foF Bt; — Pageo 1, 3 and 3 of tho UCC 1, 3, 3, ooourod party no long e r olaimo a ooourit)' int e root undor the 



4 , 5, and 11 muot bo gubmittcd intact with the corbono in 
place. 

(fi^ £b} Procurement of Forms. The Department of the 
Secretary of State does not furnish or sell UCC forms. 
UCC forms may be purchased from commercial printers. 
Anyone wishing to print UCC forms may obtain sj>ecifica- 
tions and samples from the Department of the Secretary of 
State, UCC Division, 300 North Salisbury Street, Raleigh, 
N.C. 37^+4- 27603-5909. 



Statutory Authority 
25-9-405; 25-9-406. 



G.S. 25-9-402(9); 25-9-403(5); 



.0204 FEES 

Each docum e nt Bubmitt e d for filing muot bo aooompaniod 
by tho exact otatutor>' f ee . — Thoo e dooum e nto Documents 
which are submitted with no money or with an insufficient 
amount will be returned with a note stating the exact amount 
of the fee. Fees may be paid by check, money order or 
cash. Checks and money orders should be made payable to 
the Secretary of State— North Carolina. A list of filing fees 
is available upon request. 

Statutory Authority G.S. 25-9-403. 

.0205 CONTINUATIONS 

Continuation statements will be accepted at any time until 
during the period beginning six months prior to the expira- 
tion of the original document to which it the continuation 
statement refers has expired and ending on the date of the 
expiration of that document . Accoptanco of the continuation 
statem e nt do e s not insur e that th e continuation was fil e d at 
tho prop e r tim e . If an original document expires on a 
Saturday, Sunday or on a legal holiday on which the office 
was closed, a continuation may be filed on the next day that 
the office is open for business. Continuations received 
which refer to expired documents cannot be filed. 

Statutory Authority G.S. 25-9-403. 

.0206 TERMINATION 

(a) Page number 3 of the approved UCC-1 and UCC-2 
has been designed for use as a termination statement. 
Whenever a given financing statement is to be terminated 
the secured party of record should date and sign this page in 
the space provided for termination. The secured party's 
signature must appear in this space in order to terminate the 
original document. If the signature appears elsewhere on 
this form it will not be accepted as a termination. 

(b) Form UCC-3 or UCC-4 may be used as a termination 
statement. Sections 1, 2, 5, and 7 must be completed. This 
form must be signed by the secured party of record. 

(o) A written termination stat e m e nt may b e submitted by 
the secured party of record. — Thia statement must refer to 



financing atatement bearing file numbor as shown." — This 
statement muat bo aignod by tho secured party of record. 
fd) — Aft e r an asoignment io fil e d, th e aooignoo io oonsid 
e r e d tho ooourod part)' of r e cord. 

Statutory Authority G. S. 25-9-404. 

.0207 FILING BY MAIL 

UCC documents may be mailed to the division. The 
mailing address is the Department of the Secretary of State, 
UCC Division, 300 North Salisbury Street, Raleigh, N.C. 
27611 27603-5909 . The document must be accompanied by 
the exact statutory fee. When using the standard form send 
only the first three pages of the form. Pages 1 and 2 will be 
retained by our office. Page number 3 will be returned as 
an acknowledgment of filing. If the form arrives with more 
than three pages attached the remaining pages will be 
discarded. Pages 1, 2, and 3 of the UCC 1, 3, 3, 4 , and 5 
muot be submitt e d to b e oonoid e r e d a standard filing. 
Acknowledgment of filing is normally mailed in a window 
envelojje using the name and address of the secured party on 
the UCC form. If the acknowledgment copy is to be mailed 
to an address other than that of the secured party a self 
addressed envelope should accompany the document. Wh e n 
a non standard document ia received by mail which is not 
accompanied by on approvod form, a filing receipt ia aont 
which oontnino the nam e of th e d e btor and ooour e d part)', 
th e fil e numb e r, and tho date and hour of filing. — If th e 
filing part)' dosirea a copy with the file numbor and date and 
hour of filing noted, a copy should bo aubmitted with tho 
requ e st that th e fil e numb e r and dat e and hour of filing b e 
not e d on th e copy and r e turn e d. 

Statutory Auinority G.S. 25-9-407. 

.0208 OVER THE COUNTER FILINGS 

Uniform Commercial Code documents may be file 
stamped between 7:30 a.m. and 3:00 3:30 p.m. Those 
documents received after 3:00 3:30 p.m. on any given day 
will be held filed by the filing officer and file stamf>ed with 
the following day day's date in order of receipt. Acknowl 
e dgment eopiea of documents held and filed tho following 
day may b e mail e d or picked up after 7:30 a.m. on tho 
following day. 

Statutory Authority G.S. 25-9-403. 

.0209 REFUNDS 

Refunds will be made on overpayment of filing fees in 
connection with originaJ Uniform Commercial Code Financ- 
ing Statements. R e funds will not b e mad e on oontinuationo, 
am e ndm e nts, aooignm e nto or r e l e as e s. — U^ e n overpaymonto 
are received in connoction with continuations, amendments. 



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PROPOSED RULES 



roloaooo — and — aflsignmonto — ri»e — ontiro — documont — Vr^H — be 
rotumod with a roqu e et for the oxaot amount du e . 

Statutory Authority G. S. 25-9-403. 

.0304 OVER THE COUNTER SEARCHES 

Over tho oountor ooaroh e o — mny b e made in p e rson. 
Individuals dooiring an ovor tho counter ooaroh ahould como 
diroctly to tho UCC Division of tho Doportmont of tho 
Soorotaiy of State. — CK'or tho oountor o e aroh e o may b e mad e 
from 2:00 p.m. until 1:00 p.m. Monday through Fiidny 
only. — Tho names and addroasos of tho dobtors to be 
soarohod muat be given to a mombor of tho UCC Division. 
Tho index will bo ooaroh e d by m e mboro of th e UCC 
Divioion only. The dooum e nts will thon bo pr e o e nt e d to th e 
s carohing part)' for inapoction. Undof no oiroumotonooo will 
documents be removed from the UCC Diviaion. 

Statutory Authority G.S. 25-9-407. 

.0305 FEES FOR INFORMATION 

FROM THE FILING OITICER 

Requests for Information will be prooooood rejected if 
received with no money. The completed request will be 
mailed returned with a note stating the amount due. This 
should be paid promptly. Deposit accounts are not available 
in order to pay for fees in connection with information 
requests. A schedule of fees for information and copy 
request is available from the division. 

Statutory Authority G.S. 25-9-407. 

SECTION .0400 - FEDERAL TAX LIENS 

.0404 TELEPHONE REQUEST FOR TAX 
LIENS 

Telephone roquoets for information on Federal Tax Liona 
will not b e acc e pt e d. 

Statutory Authority G. S. 44-68. 3. 

CHAPTER 6 - SECURITIES DIVISION 

SECTION 1600 - REGISTRATION OF 
QUALIFIED BUSINESSES 

.1601 PURPOSE 

The Securities Division of the Office of the Secretary of 
State of North Carolina is authorized by Article 4 of 
Chapter 105 of the North Carolina General Statutes to 
register certain qualified businesses as "Qualifi e d Inv e stment 
Organizations". "Qualified Business Ventures" Vonturoa", 
and "Qualified Grantee Businesses" as those terms are 
defined by G.S. 105-163.010, so that investments in such 
qualified businesses are eligible for the income tax credit 
provided for by G.S. 105-163.011. Those rules also 
establish the procoduro fof filing the fuiol repK)rt required by 



St-S: — 105 163.013 whon tho oxistoaoe of a — "qualifiod 
inveotm e nt organization" io terminat e d. 

Statutory Authority G.S. 105-163.013. 

.1 602 PROCEDURE FOR APPLICATION 
FOR REGISTRATION 

(a) A business which seeks to register as either a "quali - 
fiod mvostmont organization", "qualified business venture" 
or "qualified grantee biisiness" or to renew such registra- 
tion shall make wTitten application to the Securities 
Division of the Department of the Secretar\- of State of 
North Carolina on an application form entitled "Applica- 
tion For Registration as a Qualified Investment Organiza - 
tieft/ Qualified Business Venture/Qualified Grantee 
Business" furnished upon request by the Securities Divi- 
sion. 

(b) General Information Required in Application. Each 
application for registration shall contain the following 
information: 

(1) the classification (either Qualifiod Investment 
Organization. Qualified Business Venturer or 
Qualified Grantee Business) for which the 
applicant business seeks to qualify'; 

(2) an indication as to whether the application is for 
the mitial registration of the applicant business, 
or for the renewal of a registration; 

(3) the full legal name of the applicant business; 

(4) the street address and, if different, the mailing 
address of the principal office of the applicant 
business; 

(5) the telephone number and the Employer Identi- 
fication Number of the applicant business; 

(6) the date on which the applicant business' fiscal 
year ends; 

(7) the t>"pe of busmess organization of the appli- 
cant business, and a copy of the documents, if 
any. under which the applicant business is 
organized (for e.xample. the articles of incorpo- 
ration or organization ; the certificate of limited 
partnership; trust documents; certificate of 
assumed name; etc.); 

(8) the name of the authorized representative of the 
applicant business, his title, street address, 
mailing address (if different from street ad- 
dress), and telephone number; and 

(9) if the applicant business is a corporation or 
limited liabilits company, the date of and state 
of incorporation or organization, organization, 

fW) a representation that the applicant business has 
disclosed or will disclose to its investors that a 
tax credit pursuant to G.S. 105 163.011 is not 
available for on investment in the applicant 
business until the following rcquiromcnta have 
been satisfied: 



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10:15 



PROPOSED RULES 



(A) — the applicant buoinooa muot have boon dooig 
natod by th e Soouriti e o Division as eith e r a 
qualified invootmont organization, a qualifi e d 
businosB vonturo, or u qualified grantoo buoi 
no93, aa those tonnfl are dofinod by G.S. 
105 163.010; 
(B) all otatutor)' limito on the tax credit for inv e st 
monts in qualified busines s es must have boon 
diBcloaod to the investors; and 
^€) — th e inv e ntor muot have roquooted and rooeivod 
from the S e ouritieo Divioion a oortifioat e 
stating that invostmonta in the applicant buai 
no9B aro eligible for the inoomo tax credit of 
G.S. 105 163.011. and must have attach e d 
ouch oortifioate to th e application mad e to 
claim the tax credit aubmittod by the invootor 
to the Socrotnr)' of Rovonuo. 
If, at the tim e th e applioation for r e gistration io submitt e d, 
the diooloouroo r e quired by Item (b) (10) (B) of this Rul e 
have boon made to the invootors, the applicant business shall 
attach to its application for registration written ovidonoo of 
ouoh diooloour e o. 

(o) Speoifio Information R e quired Qualifi e d Invootmont 

Organization. — The application for registration as a "qimli 
fiod invootmont organizat i on" shall oontain the following 
information and repr e o e ntations on a form e ntitled "Attach 
mont A — Qualifi e d Inv e otm e nt Organization" availabl e upon 
roquost from the Socuritios Division: 

^43 a cortification that tho facts sot forth in G.S. 

105 163.013(a) (1) (5) apply to th e applicant 
buoinooD; and 

(2) in applications for renewal of regi s tration as a 

qualified invootmont organization, a schodulo 
doooribing the applicant buoinooa' invootmonto in 
qualified buoineoo v e ntures and qualifi e d grant ee 
buainooaoo, aubmittod on a form entitled "Attach 

mont A 1 Schodulo of Investments in Quali 

fi e d Buoin e sB Vonturoo and Qualifi e d Grant ee 
Buoineoooo" — available upon r e qu e st from th e 
Socuritioo Diviaion. 
{4i) {c} Specific Information and Representations Required 
— Qualified Business Venture. The application for registra- 
tion of a "qualified business venture" shall contain the 
following information and representations on a form entitled 
"Attachment B A— Qualified Business Venture" available 
upon request from the Securities Division: 

(1) a certification that the facts set forth in G.S. 
105-163.G13(b) (l)-(4) (6] apply to the applicant 
business, and a letter which: 

(A) describes the business activities in which the 
applicant business is or will be engaged; 

(B) describes how such activities meet the require- 
ments of G.S. 105-163.013(b)(3); 

(C) states whether the applicant business is or will 
be engaged in any of the activities listed in 
G.S. 105-163.013(b)(4); and 



(D) states either an estimate of the percentage of 
the gross revenues expected to be generated by 
the activities listed in G.S. 105-163. 013(b)(4) 
(for businesses organized after January 1 of 
the calendar year in which the application is 
filed) or the actual percentage of gross reve- 
nues generated by such activities (for busi- 
nesses organized prior to January 1 of the 
calendar year in which the application is filed) . 

(2) in the event that the applicant business has 
agreed to establish its headquarters and principal 
business operations in North Carolina for the 
purpose of qualifying investments for the tax 
credit, an undertaking that the applicant will 
notify in writing the Securities Division of the 
Department of the Secretary of State of North 
Carolina immediately upon the occurrence of 
any of the following: 

(A) the receipt of the first investment in the appli- 
cant business for which a tax credit pursuant to 
G.S. 105-163.011 is claimed; 

(B) the establishment by the applicant business of 
its headquarters and principal business opera- 
tions in North Carolina; or 

(C) the failure of the applicant business to establish 
its headquarters and principal business opera- 
tions in North Carolina within three months 
following the first investment in the applicant 
business for which a tax credit pursuant to 
G.S. 105-163.011 is claimed; 

(3) an undertaking to immediately notify in writing 
the Securities Division of the Department of the 
Secretary of State of North Carolina of the date 
on which either the headquarters or the principal 
business operations of the applicant business are 
removed from North Carolina, in the event that 
the applicant business does not retain its head- 
quarters or principal business operations in 
North Carolina for a period of at least three 
years following the date of each investment in 
that business for which a tax credit is claimed; 
and 

(4) in initial applications for registration as a quali- 
fied business venture, a statement that the app li- 
cant business has been organized after January 1 
of the calendar year in which the application is 
filed or a financial statement for its most recent 
fiscal year, certified by an independent certified 
public accountant, showing that the applicant 
business had revenues of five million dollars 
($5,000,000) or less, determined on a consoli- 
dated basis using generally accepted accounting 
procedures; and 

(5) in applications for renewal of registration as a 
qualified business venture, a financial statement 
for the most recent fiscal year prepared in the 
same manner and containing the same informa- 



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PROPOSED RULES 



tion as the statement described in Subparagraph 
(c)(4) of this Rule and, if the applicant business 
engages in any of the activities set forth in G.S. 
105-163.013(l))(4). showing the percentage of 
gross revenues generated by such activities. 
(e) (dj Specific Information and Representations Required 
-- Qualified Grantee Business. The application for registra- 
tion of a "qualified grantee business" shall contain the 
following information and representations on a form entitled 
"Attachment G B — Qualified Grantee Business" available 
upon request from the Securities Division: 

(1) a certification that the facts set forth in G.S. 
105-163. 013(c) (l)-(3) apply to the applicant 
business, and written evidence of the receipt of 
the grant or funding required by G.S. 
105-163. 013(c)(3) within the three years preced- 
ing the date of the application for registration or 
for renewal of registration; 

(2) in the event that the applicant business has 
agreed to establish its headquarters and principal 
business operations in North Carolina for the 
purpose of qualifying investments for the tax 
credit, an undertaking that the applicant will 
notify in writing the Securities Division of the 
Department of the Secretary of State of North 
Carolina immediately upon the occurrence of 
any of the following: 

(A) the receipt of the first investment in the appli- 
cant business for which a tax credit pursuant to 
G.S. 105-163.011 is claimed; 

(B) the establishment by the applicant business of 
its headquarters and principal business opera- 
tions in North Carolina; or 

(C) the failure of the applicant business to establish 
its headquarters and principal business opera- 
tions in North Carolina within three months 
following the first investment in the applicant 
business for which a tax credit pursuant to 
G.S. 105-163.011 is claimed; 

(3) an undertaking to immediately notify in writing 
the Securities EHvision of the Department of the 
Secretary of State of North Carolina of the date 
on which either the headquarters or the principal 
business operations of the applicant business are 
removed from North Carolina, in the event that 
the applicant business does not retain its head- 
quarters and principal business operations in 
North Carolina for a period of at least three 
years following the date of each investment in 
that business for which a tax credit is claimed; 
and 

(4) documentary evidence of the receipt of the grant 
or funding certified to in Item (^ (d) (1) (C) of 
this Rule. 

(^ (e} Signing of the Application. Each application for 
registration shall be signed by the authorized representative 
of the applicant business, and each application shall contain 



the following oath or affirmation by the signing authorized 
representative: "Under penalties prescribed by law, I o e rtify 
ft«4 hereby swear and/or affirm that to the best of my 
knowledge and belief this application is true and complete. " 
This statement shall be verified by a person duly authorized 
to administer oaths. 



(g) £f) Filing Fee. The filing fee for an initial application 
for registration as a qualifi e d invoetmont organization, 
qualified business venturer or qualified grantee business 
shall be One Hundred Dollars ($100.00). The filing fee for 
a renewal of registration as a qualified business shall be fifty 
dollars ($50.00). The filing fee shall be payable by check, 
made payable to the order of "SECRETARY OF STATE", 
and shall accompany the application for registration. 

(fe) £g} Where to File Application for Registration. All 
applications for registration shall be filed by ttiailing the 
application, together with any supplemental schedules or 
statements and the filing fee, to: 

QUAUFIED BUSINESS REGISTRATION 
Department of the Secretary of State 
Securities Division 
Room 10^ Suite 100 
300 North Salisbury Street 
Raleigh, North Carolina 27^44 27603-5909 . 
(i) £h) Due Date for Filing Application for Registration. 
The initial application for registration shall be filed prior to 
making of the investment for which an income tax credit 
pursuant to G.S. 105-163.011 will be claimed. The applica- 
tion for renewal of registration shall be filed with the 
Securities Division no later than the 15th day of the third 
month following the close of the applicant business' fiscal 
year. 

^ £i) Review of Application; Notification of Qualification 
Status. 

(1) The date of filing of all applications for registra- 
tion (both initial and renewals) shall be recorded 
at the time of receipt by the Securities Division 
and shall not be construed to be the date of 
mailing. Recordation of the date of filing does 
not indicate that the application is complete. 

(2) The Administrator of the Securities Division 
shall review all applications and designate those 
he determines to be complete. In the event that 
the administrator determines that an application 
is incomplete in any respect, the applicant will 
be notified of the application's deficiencies 
within 15 days. i\d inoompl e te applioation ohall 
be rosubmittod. Except as provided in Subpara- 
graph (i)(3) of this Rule, if the applicant does 
not remedy such deficiencies within 60 days 
following a deficiency notice from the Division. 
the application shall be rejected. 

(3) Upon examination of the application for registra- 
tion, the administrator shall determine whether 
the applicant business meets the requirements for 
classification oa a qualifiod invostmont orgoniza 
tiefi, qualified business venture venture, or 



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PROPOSED RULES 



qualified grantee business, as the case may be. 
If an applicant for registration as a qualified 
business venture was organized prior to January 
1 of the calendar year in which the application is 
filed and is unable to produce the financial 
statement described in Subparagraph (c)(4) of 
this Rule without undue hardship, the Division 
may grant a conditional registration to the appli- 
cant, subject to the applicant's furnishing to the 
Division a financial statement meeting the re- 
quirements of Subparagraph (c)(5) of this Rule 
within five months following the end of the 
a pplicant's current fiscal year. If such a finan- 
cial statement is not filed with the Division 
within the period provided by this Rule, the 
applicant's conditional registration shall be 
cancelled as of its initial effective date. When 
the determination has been made, the administra- 
tor shall notify the applicant business of its 
determination and that persons interested in 
tax-favored investments with respect to the 
applicant business may obtain from the Securi- 
ties Division certificates of such qualified status. 
(4) The submission of any false or misleading 
information in connection with an application for 
registration shall be grounds for rejection of the 
application and/or revocation of the registration. 

Statutory Authority G.S. 105-163.013. 

.1604 OBTAINING CERTIFICATES OF 
REGISTRATION 

Persons who contemplate investment in a qualified 

invootm e nt organization, a qualified business venture^- or a 

qualified grantee business may obtain a certificate stating 

that an applicant business has registered as a "qualified" 

business with the Securities Division of the Department of 

the Secretary of State and has met all requirements of 

qualification by requesting such certificate in writing from: 

CERTinCATE OF QUAUFIED STATUS 

Department of Secretary of State 

Securities Division 

Room 'lO'l Suite 100 

300 North Salisbury Street 

Raleigh, North Carolina 37444 27603-5909 . 

Statutory Authority G.S. 105-163.013. 

.1605 REPORTING REQUIREMENT/ 
TERMINATION/QUALIFIED 
INVEST ORG 

Whon tho oxiatonco of a businosa rogiatorod aa a qualified 
invostmont organization is torminatod, the businosa must file 
a final r e port with th e S e ouritioo Divioion of tho Department 
of tho Soor e tar)' of State. — In the final r e port, the buoinooa 
must include tho following information: 

(4) its name and addreas; 



(3^ 



(3)- 



itfl employer idontifieation number; 
th e nam e , addrooo, titl e , and tel e phon e number of 
ito ouoo e ooor in intoroot or peroon authorized to 
file the final report; 

(4) tho date (approximate) on which tho oxiatonco of 

th e buoinooo will bo or woo terminat e d; 

(5) a d e ooription of ito invootmento in qualified buoi 

noaa v e ntures and qualified grantee buaineaaoa aa 
of tho date of torminat i oa t 

(6) a o e rtifioation that it invootod at leant 70 poroont of 

ito capital in e quit)' ooouritioo or oubordinat e d debt 
of qualified buainoao ventures or qualified grantee 
buainea s e e ; and 

f7^ an affirmation of th e p e roon filing tho final roport 

in th e following form: — "Und e r p e nalti e o pro 
s cribed by law, I certify and affirm that to the be s t 
of my knowledge and belief tho informa tiea 
contain e d in thio Final R e port is tru e and oom 
pl e t e . " 
The final roport shall bo in letter form and shall bo filod by 
moiling it to tho addresa at which the buoinooa had filed ita 

applicat i on — for r e giotration. No fee io requir e d to bo 

submitt e d with th e final roport. 

Statutory Authority G.S. 105-163. 013(a). 



.1607 FORMS 

For use in registering as a qualified business or in renew- 
ing a registration as a qualified business pursuant to G.S. 
105-163.013, the following form is available fi^om the 
Securities Division upon request: Application For Regis- 
tration As A Qualified Investment Organization/ Qualified 
Business Venture/Qualified Grantee Business. 

Statutory Authority G.S. 105-163. 013(d). 

CHAPTER 7 - NOTARY PUBLIC 
DIVISION 

SECTION .0300 - NOTARY PUBLIC 
EDUCATION PROGRAM 

.0302 INSTRUCTORS 

(a) In order to be certified to teach a course of study for 
notaries public, an instructor must: 

(1) compl e t e a six hour inetruotor'a oouro e taught by 

th e notari e o public d e puty or other peroon ap 
proved by the Secretary of State with a grade of 
not lo s s than 8 0; transmit a written request for 
certification as a notary public instructor to the 
notaries public deputy, together with evidence of 
six months of active experience as a notary 
public: 
(2) hav e oix months activ e oxporionoo ao a notary 

public; provid e d that r e gist e rs of d ee ds, th e ir 
aaaiatanta and deputies, clorka of court, thoir 
oaaiotonta and deputioa and practicing attomoya 



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PROPOSED RULES 



at law shall bo oxompt from this roquiromont; 
pay a fee to the Notary Public Division for 
participation as a student in the notary public 
instructor course taught pursuant to G.S. lOA- 
4(d)(1). which fee shall reflect the cost of mate- 
rials, facilities, and meals, if any, related to the 
giving of that course of instruction: and 
(3) purchoso on approved notar>' public manual- 

achieve a passing grade of at least 80 per cent 
correct responses on a test administered in 
conjunction with the notary public instructor 
course. 

(b) Certification shall be offcxtivo for tv . 'o years and may 
bo ronewod by taking a r e oortifioation oourao taught by the 
notari e s public doput>' or oth e r p e rson approv e d by th e 
Scorctar)' of State. Persons who fail to achieve a passing 
grade on the final test administered in conjunction with the 
notary public instructor course may reapply to take the test 
one additional time. 

(c) Persons seeking recertification as a notary public 
instructor must apply to the notaries public director for 
recertification and must again satisfy the requirements of 
G.S. 10A-4(d) and Paragraph (a) of this Rule. 

Statutory Authority G.S. lOA-4. 



TITLE 21 - OCCUPATIONAL LICENSING 
BOARDS 

CHAPTER 18 - BOARD OF EXAMINERS 
OF ELECTRICAL CONTRACTORS 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the State Board of Examiners of Electri- 
cal Contractors intends to amend rules cited as 21 NCAC 
188.0103, .0207, .0303. .0402. .0601. .0902; repeal 183 
.0903 and .0905. 

Proposed Effective Date: February 1, 1996. 

A Public Hearing will be conducted at 8:30 a.m. on 
December 7, 1995 at the State Board of Examiners of 
Electrical Contractors, 1200 Front Street, Suite 105, 
Raleigh, NC 27609. 

Reason for Proposed Action: 

21 NCAC 183 .0103 - To delete provisions now addressed 

by statute and to correct time of meetings. 

21 NCAC 183 .0207 - To change examination application 

filing deadline. 

21 NCAC 183 .0303, .0601 and .0902 - Update to conform 

with statutory changes. 

21 NCAC 183 .0402 - To add provision for notice of 

address and telephone change. 

21 NCAC 183 .0903 aiid .0905 - Consolidated with Rule 

.0902. 



Comment Procedures: Persons interested may present 
written or oral statements at the public hearing or in writing 
prior to the hearing by mail addressed to: Robert L. 
Brooks, Jr. , State Board of Examiners of Electrical Contrac- 
tors, PO Box 18727, Raleigh, NC 27619. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government finds. 

SUBCHAPTER 18B - BOARD'S RULES 

FOR THE IMPLEMENTATION OF THE 

ELECTRICAL CONTRACTING LICENSING ACT 

SECTION .0100 - GENERAL PROVISIONS 

.0103 ORGANIZATION 

fa) Terms of Offioors. — Th e one y e ar term of the ohair 
man. vioo ohoirmon and s e orotoiy tr e asur e r shall oomm e no e 
on July 1 . — If the apfwintmont or doaignation of a now 
member of the Board is delayed beyond this date, those 
offic e rs shall continu e in offio e during the int e rim, and tho 
e lection of new offio e rs shall ho for only th e bolano e of th e 
yoar remaining aftof tbo appointment or dooignation is mado. 

(a) fte)Executive Director. The Board shall employ a 
full-time executive director whose duties shall be to manage 
and supervise the office and staff in carrying out the fwlicies 
and directives of the Board. The executive director shall 
handle all administrative duties of the Board and such other 
duties as the Board may from time to time assign. The 
executive director is designated the legal process agent for 
the Board uf»n whom all legal process may be served. The 
compensation of the executive director shall be fixed by the 
Board. 

(b) f©)Committees. TTie chairman of the Board may 
appoint regular, special, and special advisory committees. 
Regular committees facilitate prescribed phases of the 
Board's duties and operations. Special committees under- 
take specific assignments of the Board. Special advisory 
committees assist the Board's regular or special committees 
with specific board assignments. 

(c) fd)Meetings. The regular quarterly meetings of the 
Board shall begin at 9^QQ 8:30 a.m., unless some other 
place or time is set by the Board. Sp>ecial meetings may be 
held at places and times deemed by the chairman to be 
suitable to accomplish the necessary purposes for which the 
meetings are held. 

Statutory Authority G.S. 87-39; 87-40; 87-42. 

SECTION .0200 - EXAMINATIONS 

.0207 APPLICATION FOR REGULAR 
SE\n-ANNUAL EXAMINATIONS 

(a) To be eligible for consideration, applications for 
regular semi-annual examinations must be filed with the 
Board not later than Januaiy 45 \ for the March semi-annual 



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PROPOSED RULES 



examination and not later than July 4# i for the September 
semi-annual examination. 

(b) The Board's staff is empowered to determine whether (c) 

or not applications are duly filed in accordance with Rule 
.0210 of this Section, to process all duly filed applications, 
and to return all applications not duly filed. 

Statutory Authority G.S. 87-42; 87-43.3; 87-43.4. (d) 

SECTION .0300 - DEFTNITIONS AND 
EXPLANATIONS OF TERMS 
APPLICABLE TO LICENSING 

.0303 ELECTRICAL INSTALLATION: PROJECT: (e) 

PROJECT VALUE-LIMITATION 

For the purpose of implementing G.S. 87-43.3 pertaining 
to the limited and intermediate electrical contracting license 
classifications, the following provisions shall apply: (f) 

(1) Electrical Installation. Electrical work is con- 
strued to be an electrical Installation when the 
work is made or is to be made: 

(a) in or on a new building or structure; 

(b) in or on an addition to an existing building or 
structure; 

(c) in or on an existing buUding or structure, includ- 
ing electrical work in connection with Ughting or (3) 
power rewiring or with the addition or replace- 
ment of machines, equipment or fixtures; or 

(d) in an area outside of buildings or structures, 
either overhead or underground or both. 

(2) Project. An electrical installation is construed to 
be a separate electrical contracting project if all 
the following conditions are met: 

(a) the installation is, or will be, separate and (4) 
independently supplied by a separate service, 

feeder or feeder system; and 

(b) the installation is for: 

(i) an individual building or structure which is 
separated from other buildings or structures by 
a lot line or, if located on the same lot with 
other buildings or structures, is physically 
separated from such other buildings or struc- 
tures by an open space or by a 75 poroont 
solid maoonry firo wall at looot 1 2 inohos thick 
an area separation fire wall ; (a) 

(ii) an individual townhouse single-family dwelling 
unit constructed in a series or group of at- 
tached units with property lines separating such 
units; 
(iii) an individual tenant space in a mall-type shop- 
ping center; 
(iv) an addition to an existing building or structure; 

(v) an existing building or structure, including 
electrical work in connection with lighting or 
power rewiring or with the addition or replace- (b) 

ment of machines, equipment or fixtures; or 



(vi) an outdoor area either overhead or under- 
ground or both, 
the negotiations or bidding procedures for the 
installation are carried out in a manner totally 
separate and apart from the negotiations or 
bidding procedures of any other electrical instal- 
lation or part thereof; 

except for new additions, alterations, repairs or 
changes to a pre-existing electrical installation, 
no electrical interconnection or relationship 
whatsoever will exist between the installation 
and any other electrical installation or part 
thereof; 

a separate permit is to be obtained for each 
individual building structure or outdoor area 
involved from the governmental agency having 
jurisdiction; and 

if a question is raised by a party at interest or if 
requested by the Board or Board's staff for any 
reason, the owner or the awarding authority or 
an agent of either furnishes to the Board, and to 
the insp)ections department having jurisdiction, a 
sworn affidavit confirming that each and every 
one of the conditions set forth in (2)(a) through 
(e) of this Rule are satisfied. 
Relationship of Plans and Specifications to Defmi- 
tion of Project. Even though such electrical work 
may not fully comply with each and every condi- 
tion set out in Subparagraph (2) of this Rule, the 
entire electrical work, wiring, devices, appliances 
or equipment covered by one set of plans or 
specifications is construed to be a single electrical 
contracting project. 

Project Value Limitation. In determining the 

value of a given electrical contracting project, the 

total known or reasonable estimated costs of all 

electrical wiring materials, equipment, fixtures, 

devices, and installation must be included in 

arriving at this value, regardless of who furnishes 

all or part of same, and regardless of the form or 

type of contract or subcontract involved. As an 

example, on a given electrical contracting project, 

the owner or general contractor will furnish all or 

part of the electrical wiring, material, etc. and 

if the total cost of the wiring, materials, etc., 

including that ftimished by others, plus the total 

cost of the installation involved, will be more 

than aovontoon thousand five hundred dollars 

($17.500) twenty-five thousand dollars ($25,000) 

but not more than seventy-five thousand dollars 

($75,000), then only an electrical contractor 

holding either an intermediate or unlimited 

license wiU shall be eligible to submit a proposal 

or engage in the project. 

if the total cost of the wiring, materials, etc., 

including that furnished by others, plus the total 

cost of the installation involved, will exceed 



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1580 



PROPOSED RULES 



seventy-five thousand dollars ($75,000), then 
only an electrical contractor holding an unlimited 
license will shall be eligible to submit a prop>osal 
or engage in the project. 
If a given electrical contracting project is subdivided into 
two or more contracts or subcontracts for any reason, then 
the total value of the combined contracts or subcontracts 
which can be awarded to or accepted by any one licensee of 
the Board must be within the total project value in accor- 
dance with this Rule. 

The Board's staff is empowered to make a determination 
of what constitutes a project in any given situation, and any 
party at interest shall have the right to appeal any staff 
determination to the Board for a final binding decision. 

Statutory Authority G.S. 87-42; 87-43; 150B-11(1). 

SECTION .0400 - LICENSING REQUIREMENTS 

.0402 LICENSE NAME REQUIREMENTS 

(a) Issuance of License. No license shall be issued by the 
Board in a name which is the same as or similar to the name 
in which a license has already been issued. The Board's 
staff is empowered to determine whether or not the name 
requested on a license application is the same as or similar 
to the name in which a license has already been issue. If 
any license applicant objects to the staffs determination, he 
may appeal to the Board for a final determination. 

(b) Name In Which Business Must Be Conducted. All 
electrical contracting business, including all business 
advertising and the submission of all documents and papers, 
conducted in the state of North Carolina by a licensee of the 
Board shall be conducted in the exact name in which the 
electrical contracting license is issued. 

(c) Notification of Address and Telephone Change. All 
licensees shall notify the Board in writing within 30 days of 
any change in location or mailing address and telephone 
number. 

Statutory Authority G. S. 87-42. 

SECTION .0600 - RECLASSIFICATION OF 

FORMER CLASS I AND CLASS II LICENSES 

A>fD QUALIFIED INDIVIDUALS 

.0601 LICENSES EXPIRING AND INDIVIDUALS 
QUALIFIED/JULY 1, 1970 

(a) Inactive Class I Licensee or Individual. Subject to 
Section .0400 of this Subchapter, any licensee whose last 
active license was a Class I license that expired on or before 
June 30, 1970, or any listed qualified individual who was 
last indicated as such on a Class I license that expired on or 
before June 30, 1970, and currently has Class I license 
qualifications is entitled to receive, without written examina- 
tion, a license in either the limited, intermediate or unlim- 
ited classification upon: 



(1) filing an application with the Board designation 
the class license desired; and 

(2) paying the annual license fee for the license 
classification desired. 

(b) Initial Choice of license Classification. The inactive 
Class 1 licensee or Class I qualified individual is entitled to 
initially choose either the limited, intermediate or unlimited 
license. Thereafter the same requirements which apply to 
new applicants must be met to obtain a license in a classifi- 
cation higher than the license initially chosen. 

(c) Inactive Class II Licensee or Individual. Subject to 
Section .0400 of this Subchapter, any licensee whose last 
active license was a Class II license that expired on or 
before June 30, 1970, or any listed qxialified individual who 
was last indicated as such on a Class 11 license that expired 
on or before June 30, 1970, and currently has Class II 
license qualifications is entitled to a license in either the 
limited, intermediate or unlimited license classification 
without written examination upon meeting the requirements 
for the particular license classification as follows: 

(1) To obtain a limited license, the applicant must: 

(A) file an appUcation with the Board requesting a 
limited license; and 

(B) pay the annual fee for the limited license. 

(2) To obtain an intermediate license, the applicant 
must: 

(A) file an application with the Board requesting an 
intermediate license; 

(B) pay the annual fee for the intermediate license; 
and 

(C) furnish to the Board, on a form provided by 
the Board, a statement from a bonding com- 
fjany Ucensed to do business in North Carolina 
certifying the applicant's ability to furnish a 
performance bond for electrical contracting 
projects in excess of oovontoon thouaand fivo 
hundred dollars ($17,500) twenty five thousand 
dollars ($25.000) or submit other information 
regarding Jh« the applicant's financial and 
business qualifications for evaluation by the 
Board. 

(3) To obtain an unlimited license, the applicant 
must: 

(A) file an application with the Board requesting an 
unlimited license; 

(B) pay the annual fee for the unlimited license; 
and 

(C) furnish to the Board, on a form provided by 
the Board, a statement from a bonding com- 
pany licensed to do business in North Carolina 
certifying the applicant's ability to furnish a 
porformift g performance bond for electrical 
contracting purjxises in excess of seventy-five 
thousand dollars ($75, OCX)) or submit other 
information regarding hM the a pplicant's 
financial and business qualifications for evalua- 
tion by the Board. 



1581 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



Statutory Authority G.S. 87-42; 87-49. 

SECTION .0900 - VIOLATIONS AND 
CONTESTED CASE HEARINGS 

.0902 CHARGES AND PRELIMINARY 
PROCEDURES 

;\ny |x>rgon v i ho boliovoa that any applicant, qunlifiod 
individual or liconsoo of the Board is in violation of th e 
provioiono of G.S. Chapter 8 7, Artiolo ^, or Titl e 21, 
Subohaptor 1 8 B. of tho North Carolina Administrativ e Cod e 
may profor chargoB by filing a written statomont with the 
Boaixl'a staff in tho Board'o office, iwtting out the partioularo 
of th e ohargoo, including, but not limited to, tho natur e , dat e 
and plaoo of th e alleged violation. 

(a) The authority given to the Board's executive director 
in this Rule shall include the executive director's authority 
to delegate to other members of the Board's staff. 

(b) Charges filed pursuant to G.S. 87-47(a4) shall be 
handled according to the progressive steps set out in 
Paragraphs (c) through £fl of this Rule. 

(c) A charge shall be handled initially by the executive 
director. The executive director may, without a hearing, 
dismiss it as unfounded or trivial. Unless it is dismissed, 
the executive director shall: 

(1) issue and cause to be served on the accused a 
written notice of violation, including a repri- 
mand, or including an assessment of a civil 
penalty in a specific amount pursuant to G.S. 
87-47("a3) and a reprimand: or 

(2) give the accused written notice of the charge, 
including a request that the accused respond to 
it in writing within 20 days. 

(d) The executive director may, upon receipt and evalua- 
tion of the response, dismiss the charge as unfounded or 
trivial without a hearing, or the executive director may turn 
the matter over to the Board's disciplinary review commit- 
tee. 

(e) The disciplinary review committee may, without a 
hearing, dismiss the charge as unfounded or trivial. Unless 
it is dismissed, the committee shall: 

(1) issue and cause to be served on the accused a 
written notice of violation, including a repri- 
mand, or including an assessment of a civil 
penalty in a specific amount pursuant to G.S. 
87-47(a3) and a reprimand; or 

(2) recommend to the Board that a penalty or penal- 
ties be imposed pursuant to G.S. 87-47(a2) and 
(a3) or that an offer in compromise pursuant to 
G.S. 87-47(e) be accepted. 

(f) The Board may, without a hearing, dismiss the charge 
as unfounded or trivial. Unless it is dismissed, the Board 
shall: 

(n issue and cause to be served on the accused a 
written notice of violation, which shall include 
the imposition of a penalty or penalties pursuant 
to G.S. 87-47(a2) and (a3). and which may 



include notice that the Board will accept an offer 
in compromise pursuant to G.S. 87-47(e): or 
(2) set an administrative hearing on the charge, 
notice of which may include a statement that the 
Board will accept mi offer in compromise pursu- 
ant to G.S. 87-47(e'). 
(g) Before an administrative hearing is held, the Board 
may direct the disciplinary review committee to meet with 
the accused and the complainant in a final effort to effect a 
settlement. 

(h) Each notice of violation shall include a statement of the 
right to request a hearing, pursuant to G.S. 87-47(a4). 

Statutory Authority G.S. 87-42; 87-47. 

.0903 PRELIMINARY DETERMINATION 

(a) A charge filed in aooordonco with Rule .0902 of this 
S e ction ohall b e handled initially by th e Bourd'o e xooutivo 
dir e ctor or hio staff deoign ee , — who may dismioo it as 
unfounded, frivolous, or trivial. 

(b) UnleGQ tho charge is dismiosod pursuant to Paragraph 
(a) of this Rul e , th e e x e cutiv e director or his s taff deoignee 
ahall notify' th e aoouo e d in writing. Suoh written notice shall 
set forth tho allogod facto and oireumstfmoo fl oo contained in 
tho written statement filed with the Board and shall bo given 
p e rsonally or by c e rtifi e d mail, return r e c e ipt r e quested. 
Suoh writt e n notic e shall contain a request for the aoouo e d 
to answer in writing within 20 days from the date tho notioe 
of chorgos is rocoivod, as shown on tho rotumod rocoipt or 
from th e date of p e rsonal delivery of th e notio e of ohargoo. 

(«^ — If the aoouoed admits to th e ohargoo and if, in th e 
opinion of tho oxocutiv e director or his staff designoo, tho 
ohargoo do not merit review by tho Board's disoiplinory 
r e vi e w oommitt ee , — th e e x e outivo — dir e ctor or hio staff 
designee shall acc e pt th e aoous e d'o admission of guilt and 
issue a reprimand on behalf of tho Board. — Tho reprimand 
shall include an order to tho accused to refrain from 
violating G.S. Chapt e r 8 7, i\rtiol e ^, or 21 NCAC Subohap 
t e r 1 8 B in the future. 

(4) — If tho accused admits to the charges and if, in tho 
opinion of tho oxocutive director or hi s staff designoo, the 
ohargeo merit review by tho Board's disciplinary r e vi e w 
oommitte e , th e e xecutive dir e ctor or his staff d e sign ee shall 
rofor tho charges to tho committee. — After reviewing tho 
charges, tho committee shall moke a preliminary determina - 
tion of the ohargeo and reoommend to th e Board whioh, if 
any, of tho actions listed in Paragraph (g) should b e tak e n 
against tho aoouoed. 

ffr) — If tho accused does not respond to or denies the 
charg e s, th e Board's executiv e dir e ctor, his staff d e oigne e or 
other d e oignatod invootigativ e p e rsonn e l ohall inv e otigat e th e 
allegations contained in tho charges and tho oxocutive 
director or his staff designee may dismiss thorn as un 
found e d, frivolous or trivial, or may r e f e r th e oharg e o, 
inv e stigativ e findingo and all availabl e e vid e nc e to th e 
Board's disciplinary review committee for review. — From 
such reviow, tho disciplinary' review oommittoo shall mako 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1582 



PROPOSED RULES 



a prolimirmo' dotormination of the chargoa and rocommond 
to tho Board whioh, if any, of th e aotiono liotod in Paragraph 
(g) should b e takon against tho aoous e d. 

ff) — Tho ohargos. invoetigativo findings, ovidonoo and 
diapooition of oaoh cooo s hall bo plaood in a pormanont File 
of tho goouo e d. — "Whon a sooond charg e io filod againot th e 
aoouo a d during a period of 12 montho or a third ohargo io 
Filod againot tho acxjuood during any pwriod of time, the 
oxocutivo diroctor or hi s staff doaignoo ohall prooont the 
aooucod'B file to tho Board's diooiplinar>' r e vi e w oommitt ee 
for g dotailod ros' i ow. — From Buoh review, the diooip l inary 
review committee shall mako a proliininary determination of 
tho new chargco filed against tho accused and recommend to 
tho Board v . ihgt gotion, if any, ohould bo tak e n againot tho 
aoous e d ao proooribod in Paragraph (g) of thio Rul e . 

(g) In aocordaneo with Paragraphs (d) — (f) of this Rule, 
tho Boaixi' s disciplinary' review committoo shall rooeivo and 
r o viesv the aoous e d'o fil e and from such review th e commit 
too shall mak e a preliminary determination — and r e comm e nd 
to tho Board that ono or more of tho following actions bo 
token: 

fi^ tho ohargoo b e dismioo e d as unfound e d, frivo 

louo. or trivial; 

(i) a letter of caution be issued to the liconsoo by 

the Board; 

(5) in a oaoo of admiooion of guilt, a l e tter of ropri 

mand bo iocu e d to the lic e ns ee by th e Board; or 

f4^ tho case be presented to the Board, excluding 

board members who participated in the prelimi 
nar)' determination, for an administrativ e h e aring 
to bo conduct e d in aooordanoe with G.S. 8 7 17 
and Chapter 150B, Article 3A, of th e North 
Carolina General Statues and tho rules adopted 
by the Board pursuant thereto, or for th e aco e p ' 
tano e of an offer in oompromioo of th e charg e , 
as provided by G.S. 8 7 4 7(o). 

Statutory Authority G.S. 87-42: 87-47; 150B, Article 3 A. 

.0905 JUDICIAL REVIEW 

Any applicant, qualified individual or licensee who is 
aggriev e d by a final d e cision of th e Board aft e r a cont e st e d 
cas e h e aring is e ntitl e d to judicial r e vi e w of th e d e cision as 
provided by G.S. Chaptor 150B, Article 4 . 

Statutory Authority G. S. 87-47; 150B-43. 

CHAPTER 26 - LICENSING BOARD 
OF LANDSCAPE ARCHITECTS 

Notice is hereby given in accordance with G.S. 
150B-21.2 that the North Carolina Board of Landscape 
Architects intends to amend rule cited as 21 NCAC 26 
.0307. 



Proposed Effective Date: February 1, 1996. 

A Public Hearing will be conduaed at 10:00 a.m. on 
November 20, 1995 at the North Carolina Board of Land- 
scape Architects, 3733 Benson Drive, Raleigh, NC 27609. 

Reason for Proposed Action: To simplify Continuing 
Education requirement. Also, easier maintenance of record 
keeping. 

Comment Procedures: Any interested person may present 
comments by oral presentation or by submitting a written 
statement. Persons wishing to make oral presentation should 
contaa Mr. Robert Upton, 3733 Benson Dr., Raleigh, NC 
27609. Telephone »9 19-850-9088. In order to allow the 
commission sufficient time to review and evaluate your 
written comments, please submit your comments to Robert 
Upton at the above address, no later than the close of 
business on December 1 , 1995. 

Fiscal Note: This Rule does not affea the expenditures or 
revenues of state or local government funds. 

SECTION .0300 - EXAMINATION AND 
LICENSING PROCEDURES 

.0307 CONTINUING EDUCATION AS A 

CONDITION OF ANNUAL RENEWAL 

(a) In order for a licensee to qualify for license renewal 
as a Landscape Architect in North Carolina, the licensee 
must have completed 30 JO contact hours of continuing 
education witliin the previous year, t»'o yoars, or be granted 
an exception by the Board for reasons of hardship. Such 
continuing education shall be obtained by active participation 
in courses, seminars, sessions or programs approved by the 
Board. 

(b) To be acceptable for credit toward this requirement, 
all courses, seminars, sessions or programs shall first be 
submitted to a five member Advisory Committee of North 
Carolina licensed Landscape Architects appointed by the 
Chairman of the Board with the advice and consent of the 
Board. The Continuing Education Advisory Committee 
shall recommend any course, seminar, session or program 
for continuing education credit to the Board that the Advi- 
sory Committee finds to meet the criteria in Paragraph 
(b)(l)(2) of this Rule. Advisory Committee members shall 
be reimbursed per diem and travel exj>enses for official 
meetings at rates equivalent to rates allowed for Board 
members. Advisory Committee members shall serve at the 
discretion of the Board. 

(1) Each course, seminar, session or program to be 
recommended for approval by the Board shall, 
in the opinion of at leaot four a majority of the 
members of the Advisory Committee, have a 
direct relationship to the practice of Landscajje 
Architecture as defined in Chapter 89A of the 
General Statutes of North Carolina and contain 



1583 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



PROPOSED RULES 



i 



elements which will enhance the health, safety 
and welfare of the citizens of North Carolina 
served by North Carolina licensed Landscape 
Architects. 
(2) The Continuing Education Advisory Committee 
shall meet at least once during each three month 
quarter of the year and act on each course, 
seminar, session or program properly submitted 
for its review. Each program shall be recom- 
mended for approval, recommended for disap- 
proval or deferred for lack of information. 
Programs recommended for approval shall be 
accompanied by a brief statement of findings by 
the committee of how the program meets the 
criteria established by this Rule. Programs 
deferred for lack of information shall be de- 
ferred only once; and if information is still 
lacking when next considered, the program shall 
be recommended for disapproval. Programs 



may be recommended for pre-approval by the 
Advisory Committee before they actually occur. 

(c) Documentation of compliance with this Section shall 
be by affidavit provided on the application for license 
renewal. Erroneous or false information attested to by the 
licensee shall be deemed as grounds for denial of license 
renewal and possible suspension of license or denial of 
consideration for future license reinstatement, at the discre- 
tion of the Board. 

(d) R e quir e m e nto of thio S e ction for lioonD e r e newal ohall 
b e com e e ff e ctiv e for lio e nse r e n e wal on July 1, 1993. The 
Continuing Education Advi s ory Committoo shall bo ap 
pointed and ready to sor^'o no lator than Juno 1, 19JX). 
Twenty contact hours within the previous two years shall be 
allowed for license renewals during the period of July J^ 
1995 to June 30. 1996. 

Statutory Authority G.S. 89A-3(c); 89A-5. 



10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1584 



LIST OF RULES CODIFIED 



J. he List of Rules Codified is a listing of rules that were filed with OAH in the month indicated. 


Key: 




Citation 


= Title, Chapter, Subchapter and Rule(s) 


AD 


= Adopt 


AM 


= Amend 


RP 


= Repeal 


With Chgs 


= Final text differs from proposed text 


Corr 


— Typographical errors or changes that requires no rulemaking 


Eff. Date 


= Date rule becomes effective 


Temp. Expires 


= Rule was filed as a temporary rule and expires on this date or 180 days 



NORTH CAROLINA ADMINISTRATIVE CODE 



[TLE 


DEPARTMENT 


5 


Correction 


10 


Human Resources 


12 


Justice 


13 


Secretary of State 


15A 


Environment, Health, 




and Natural Resources 


19A 


Transportation 



SEPTEMBER 95 




TITLE 


DEPARTMENT 


21 


Occupational Licensing Boards 




2 - Architecture 




32 - Medical Examiners 




46 - Pharmacy 




48 - Physical Therapy Examiners 




54 - Practicing Psychologists 




60 - Refrigeration Examiners 


24 


Independent Agencies 




5 - State Health Purchasing Alliance 


25 


State Personnel 



Citation 


AD 


AM 


RP 


With 
Chgs 


Corr 


Eff. 
Date 


Temp. 
Expires 


5 NCAC 2B .0100 










/ 






10 NCAC 3U .0602 










/ 






268 .0110 




/ 




/ 




10/01/95 




26H .0212 - .0213 




/ 








09/15/95 


180 DAYS 


.0213 




/ 








09/29/95 


180 DAYS 


423 .1209 


/ 










10/01/95 


180 DAYS 


42C .2010 


/ 










10/01/95 


180 DAYS 


42D .1409 


/ 










10/01/95 


180 DAYS 


12 NCAC 4E .0104 




/ 




/ 




10/01/95 




11 .0210 




/ 








10/01/95 




13 NCAC 7F .0101 




/ 








09/06/95 




.0201 




y 








09/06/95 







1585 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



LIST OF RULES CODIFIED 





Citation 


AD 


AM 


RP 


With 
Chgs 


Corr 


Eff. 
Date 


Temp. 
Expires 


13 NCAC 7F .0501 




• 








09/06/95 




15A NCAC 2B .0201 




• 








10/01/95 




.0211 - .0212 




• 




• 




10/01/95 




.0214 - .0216 




/ 




/ 




10/01/95 




.0218- .0219 




/ 




/ 




10/01/95 




.0220 - .0228 


• 






• 




10/01/95 




4A .0001 




• 








10/01/95 




.0005 




/ 




/ 




10/01/95 




.0016 




/ 




/ 




10/01/95 




.0020 




/ 




/ 




10/01/95 




.0029 - .0030 


/ 










10/01/95 




4C .0007 - .0008 




/ 








10/01/95 




.0010 




/ 








10/01/95 




4D .0002 




/ 








10/01/95 




.0003 






/ 






10/01/95 




13B .0101 




/ 




/ 




10/01/95 




.0103 




• 








10/01/95 




.0503 




/ 




/ 




10/01/95 




.0802 - .0814 






/ 






10/01/95 




.0815 


/ 










10/01/95 




.0816 - .0817 


/ 






/ 




10/01/95 




.0818 


/ 










10/01/95 




.0819 - .0822 


/ 






/ 




10/01/95 




.0823 - .0824 


/ 










10/01/95 




.0825 - .0826 


/ 






/ 




10/01/95 




.0827 - .0829 


• 










10/01/95 




ISA .2508 




/ 








01/01/96 




.2510 - .2511 




/ 




/ 




01/01/96 




.2516 - .2518 




/ 




/ 




01/01/96 




.2519 




/ 








01/01/96 




.2521 




/ 




/ 




01/01/96 




.2522 - .2524 




/ 








01/01/96 




.2526 




/ 




/ 




01/01/96 







10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1586 









LIST OF RULES CODIFIED 






■ 














Citation 


AD 


AM 


RP 


With 
Chgs 


Corr 


Eff. 
Date 


Temp. 
Expires 




15A 


NCAC 18A 


.2528 




/ 




/ 




01/01/96 




^ 


.2529 - .2530 




/ 








01/01/96 




f 


.2531 - .2532 




/ 




/ 




01/01/96 






.2533 - .2534 




/ 








01/01/96 






.2535 




/ 




/ 




01/01/96 






.2537 




/ 




/ 




01/01/96 






.2540 - .2542 


/ 










01/01/96 








19A 


.0401 




/ 








10/01/95 






.0406 




/ 








10/01/95 






.0502 




/ 








10/01/95 








24A 


.0404 




/ 








10/01/95 






I9A 


NCAC 2D 


.0801 




/ 








10/01/95 






21 


NCAC 2 


.0206 




/ 




/ 




10/01/95 






.0303 




/ 




/ 




10/01/95 








32H 


.0506 


/ 






/ 




07/01/96 








46 


.2601 




/ 




/ 




10/01/95 






.1603 - .1605 










/ 






i 


.1608 










/ 






f 


.1610 










/ 








.2102 










/ 






.2109 










/ 






.2504 










/ 






.2603 - .2606 










/ 








48D 


.0006 




/ 








10/01/95 




.0008 






/ 






10/01/95 






.0011 


/ 






/ 




10/01/95 








48E 


.0110 




/ 




/ 




10/01/95 








48F 


.0002 




/ 




/ 




10/01/95 








48G 


.0501 - .0503 


/ 










10/01/95 






.0504 


/ 






/ 




10/01/95 




< 


.0505 - .0506 


/ 










10/01/95 






.0507 


/ 






/ 




10/01/95 






.0508 


/ 










10/01/95 




1 

















i557 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15 



^ 









LIST OF RULES CODIFIED 










Citation 


AD 


AM 


RP 


With 
Chgs 


Corr 


Eff. 
Date 


Temp. 
Expires 


21 


NCAC 48G 


.0509 


/ 






• 




10/01/95 




.0510 - .0513 


/ 










10/01/95 




.0514 


/ 






/ 




10/01/95 




.0515 - .0516 


/ 










10/01/95 




.0601 


• 






/ 




10/01/95 






48H 


.0104 






• 






10/01/95 




.0701 


/ 






/ 




10/01/95 




.0702 


/ 










10/01/95 




.0703 - .0704 


/ 






/ 




10/01/95 






54 


.1602 




/ 








10/01/95 




.1702 




/ 








10/01/95 






60 


.0103 




/ 








10/01/95 




24 


NCAC 5 


.0419 


• 






/ 




10/01/95 




25 


NCAC ID 


.0509 




/ 




/ 




10/01/95 






IE 


.1402 - .1404 




/ 




• 




10/01/95 




.1405 




/ 








10/01/95 




.1406 - .1408 




/ 




/ 




10/01/95 




.1409 




/ 








10/01/95 




.1410 - .1411 


/ 






/ 




10/01/95 






IJ 


.0604 - .0605 




/ 




/ 




10/01/95 




.0606 




/ 








10/01/95 




.0608 




/ 




/ 




10/01/95 




.0610 - .0612 




/ 




/ 




10/01/95 




.0613 - .0615 


/ 






/ 




10/01/95 





10:15 



NORTH CAROLINA REGISTER 



November 1, 1995 



1588 



RRC OBJECTIONS 



1 he Rules Review Commission (RRC) objected to the following rules in accordance with G.S. 150B-21.9(a}. State 
agencies are required to respond to RRC as provided in G.S. I50B-21. 12(a). 



ENVIRONMENT, HEALTH, AND NATURAL RESOURCES 
Environmental Health 

15 A NCAC ISA .2509 - Plan Review and Approval 

Rule Withdrawn by Agency 
15A NCAC ISA .2531 - Wading Pools 

Agency Revised Rule 
15A NCAC ISA .2531 - Spas and Hot Tubs 

Agency Revised Rule 

Environmental Management 

15 A NCAC 2B .0212 - Fresh Surface Water Quality Standards for Class WS-I Waters 

Agency Revised Rule 
15A NCAC 2B .0214 - Fresh Surface Water Quality Standards for Class WS-II Waters 

Agency Revised Rule 
15A NCAC 2B .0215 - Fresh Surface Water Quality Standards for Class WS-lII Waters 

Agency Revised Rule 
15 A NCAC 2B .0219 - Fresh Surface Water Quality Standards for Class B Waters 

Agency Revised Rule 
15A NCAC 2B .0222 - Tidal Salt Water Quality Standards for Class SB Waters 

Agency Revised Rule 
15A NCAC 2B .0224 - High Quality Waters 

Agency Revised Rule 

Health: Epidemiology 

15A NCAC 19H .0702 - Research Requests 
Rule Withdrawn by Agency 

Sedimentation Control 

15A NCAC 4B .0020 - Inspections and Investigations 
Agency Revised Rule 

Solid Waste Management 

15A NCAC 13B .0815 - Incorporation by Reference 

Agency Revised Rule 
15A NCAC 13B .0817 - Septage Management Firm Permits 

Agency Re\'ised Rule 
15A NCAC 13B .0819 - Septage Land Application Site Permits 

Agency Revised Rule 
15A NCAC 13B .0820 - Septage Detention and Treatment Facility Permits 

Agency Revised Rule 
15A NCAC 13B .0821 - Location of Septage Land Application Sites 

Agency Revised Rule 
15A NCAC 13B .0822 - Managem£nt of Septage Land Application Sites 

Agency Re\'ised Rule 
15 A NCAC 13B .0825 - Standards for Septage Treatment and Detention Facilities 

Agency Revised Rule 





09/21/95 


RRC Objeaion 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objection 


09/21/95 


Obj. Removed 


09/21/95 



RRC Objection 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objeaion 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objection 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objection 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objeaion 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objection 


09/21/95 


Obj. Removed 


09/21/95 



RRC Objection 
Obj. Removed 



09/21/95 



09/21/95 
09/21/95 



RRC Objeaion 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objection 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objection 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objeaion 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objection 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objeaion 


09/21/95 


Obj. Removed 


09/21/95 


RRC Objeaion 


09/21/95 


Obj. Removed 


09/21/95 



1589 



NORTH CAROLINA REGISTER 



November 1, 1995 



10:15